The offshore Chinese currency yuan briefly rallied past the 7.0 per dollar milestone for the first time in 16 months on Wednesday, as investors digested China's stimulus measures to stabilize growth and the recent U.S. Fed rate cut kept the dollar on the back-foot.
China's central bank governor Pan Gongsheng Tuesday said that the country will cut the reserve requirement ratio (RRR) by 0.5 percentage point in the near future, providing about 1 trillion yuan (about 142.30 billion U.S. dollars) in long-term liquidity to the financial market.
Depending on the liquidity situation in the market, the RRR may be further lowered by 0.25 to 0.5 percentage point within the year, Pan told a press conference in Beijing.
Meanwhile, the U.S. Federal Reserve announced last week that it will slash the target range for the federal funds rate by 50 basis points, marking the first rate cut since March 2020 and signaling the start of a monetary policy easing cycle.
"On the one hand, as U.S. Federal Reserve kicked off a monetary policy easing cycle, the interest rate difference between the Chinese and U.S. currencies narrowed. On the other, the resilience of China's foreign trade and its high trade surplus have helped stabilize the Chinese yuan exchange rate. The recent introduction of a host of policies to stabilize growth has also significantly boosted market confidence," said Wen Bin, chief economist at the Beijing-based China Minsheng Bank.
Recently, the supply and demand of the foreign exchange market have become more balanced. Data released by the State Administration of Foreign Exchange showed that in August, the cross-border income and expenditure volume of enterprises, individuals and other non-bank sectors has changed from a deficit previously to a surplus of 15.3 billion U.S. dollars.
"The appeal of Chinese yuan assets has increased dramatically, attracting the inflow of overseas capital, and further promoting steady performance and gradual improvement of the Chinese yuan exchange rate. We have every reason to believe that with the continued support of policies and the fundamentals of the economy, the Chinese yuan exchange rate can stay in a balanced range and perform well," said Tian Lihui, director of the Institute of Finance and Development at the Nankai University in north China's Tianjin Municipality.
Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts
Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts
Pakistan on Monday continued to tighten security in its capital Islamabad ahead of the expected second round of U.S.-Iran talks despite no indication that Iran has changed its mind about staying out of the negotiations with the United States.
Pakistan has placed the capital city and the neighboring garrison city of Rawalpindi on high security alert. On Sunday evening, the Pakistani government announced that ministries, government offices, and related agencies inside the Red Zone would shift to remote work on Monday.
According to police sources, some 20,000 police personnel, supported by hundreds of elite commandos, including snipers, have been deployed on security duty across the twin cities. Similar arrangements were made before the first round of peace talks.
Authorities have also suspended all public and goods transport in Rawalpindi and Islamabad as part of the security plan, while most entry points to the Red Zone have been sealed.
Major hotels, including Serena Hotel and Marriott Hotel, have asked guests to vacate after the government requisitioned the properties for the talks. Hostels and guest houses in the capital were also directed to close until further notice.
Analysts say Pakistan is still working in an effort to bring Washington and Tehran back to the negotiation table.
Pakistan on Sunday abruptly cleared potential venues for the next round of talks, including the Serena Hotel -- a five-star property in the Red Zone -- where the first round was held. Later that evening, Pakistani Prime Minister Shehbaz Sharif held a 45-minute phone call with Iranian President Masoud Pezeshkian.
Outside the Jinnah Convention Centre, which served as the media center for the first round of U.S.-Iran talks, the official backdrop for the negotiations has been put up again. Security personnel at the entrance confirmed that the media center is being rebuilt.
All signs suggest that Pakistan is making maximum preparations for the new round of diplomatic talks.
However, compared to the high-profile approach before the first round of talks, Pakistan's latest security measures, while more extensive, have been accompanied by a notably lower public profile. As of now, there has been no further word on the approval of press credentials.
According to Iranian media, this contrast sends a clear message: Pakistan's role has shifted from "enthusiastic host" to "cautious gatekeeper." Its goal now is to create a tightly controlled, secure, and media-free space where the main protagonists -- the United States and Iran -- can focus on building mutual trust.
On Feb. 28, Israel and the United States launched joint attacks on Tehran and other Iranian cities, killing Iran's then-Supreme Leader Ali Khamenei, senior commanders, and civilians. Iran responded with waves of missile and drone strikes targeting Israel and U.S. bases and assets in the Middle East.
A ceasefire between the United States and Iran took effect on April 8. Iranian and U.S. delegations then held talks in Islamabad on April 11 and 12, but no progress was reported.
Pakistan tightens security in capital ahead of expected 2nd round of US-Iran talks
