The offshore yuan traded around 6.70 per dollar on Wednesday, remaining at its strongest level since January 2023 as investors increasingly turn to the currency as a funding option for carry trades. The recent surge in the yen has prompted investors to look for alternatives such as the yuan, given China’s relatively low interest rates and currency stability. While major central banks face pressure to keep rates elevated or tighten policy further, China’s comparatively low borrowing costs allow investors to finance higher-yielding assets at a lower cost. On the economic front, annual consumer inflation rose to 0.8% in August, matching forecasts and accelerating from a six-month low of 0.5% in July. Producer price inflation also picked up to 3.8% from a three-month low of 3.5%, exceeding market expectations of 3.7%. The increase in price pressures was driven mainly by higher energy costs amid ongoing tensions in the Middle East.