Today Markets Analysis
The offshore yuan edged higher toward 6.70 per US dollar on Thursday, extending a period of relative strength as China expands the infrastructure supporting direct yuan-based foreign-exchange trading.
The move comes as the Shanghai Clearing House expands central-counterparty clearing for spot transactions involving the Singapore dollar, New Zealand dollar and Thai baht, adding three currencies to its yuan-linked clearing network.
The development is strategically important because it gives banks a broader mechanism for settling and managing regional FX transactions through China’s domestic clearing infrastructure. On the first day of the expanded service, 12 banks cleared approximately RMB 996 million across the newly supported currencies.
At the same time, markets are watching the next stage of US-China economic negotiations, with U.S. Treasury Secretary Scott Bessent due to meet Chinese Vice Premier He Lifeng ahead of the scheduled September 24 meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
That combination puts the yuan at an interesting crossroads: China is strengthening the infrastructure for international yuan usage while diplomatic and trade negotiations could influence near-term currency sentiment.
Offshore Yuan Market Snapshot
| Factor | Current Signal |
|---|---|
| Offshore yuan | Around 6.70/USD |
| Recent direction | Slightly higher |
| Shanghai Clearing House | Expanded CCP clearing |
| New currencies | SGD, NZD and THB |
| First-session clearing | RMB 996 million |
| Participating banks | 12 |
| PBOC Sept. 14 central parity | 6.7698/USD |
| Trump-Xi meeting | Scheduled for Sept. 24 |
| Bessent-He Lifeng talks | Scheduled ahead of summit |
The People’s Bank of China set the September 14 central parity at 6.7698 yuan per dollar, illustrating how the onshore reference rate remains an important benchmark alongside offshore CNH trading.
China Expands Yuan Clearing Infrastructure
The most important development behind the latest move is not the one-day change in the yuan itself.
It is the gradual expansion of the infrastructure surrounding the currency.
Shanghai Clearing House began offering central-counterparty clearing for spot Singapore dollar, New Zealand dollar and Thai baht transactions on September 14.
The first session involved 12 banks and RMB 996 million in cleared transactions.
Central-counterparty clearing can reduce bilateral counterparty exposure and make it easier for participating institutions to manage settlement and credit requirements.
For China, the strategic significance is broader.
The more currencies that can be traded and cleared through infrastructure connected to the yuan, the easier it becomes for banks and companies in China’s trading network to conduct transactions without necessarily routing every transaction through the U.S. dollar.
That does not mean the yuan is replacing the dollar.
It does mean China is continuing to build the financial infrastructure required for greater international yuan usage.
Why Singapore, New Zealand and Thailand Matter
The choice of currencies is also significant.
Singapore, Thailand and New Zealand all have established trade and investment relationships with China.
Expanding direct clearing arrangements for their currencies creates additional channels for regional businesses and financial institutions to transact through yuan-linked infrastructure.
China’s central clearing house described the expansion as part of efforts to broaden the coverage of FX clearing services and develop a multi-currency clearing framework.
The longer-term objective is therefore less about the immediate RMB 996 million first-day volume and more about network expansion.
Every additional currency supported increases the potential number of cross-border transactions that can be settled through China’s financial system.
Yuan Internationalisation Is a Long-Term Project
China has been working for years to increase the international use of the yuan.
The process requires considerably more than encouraging companies to invoice trade in RMB.
It requires:
- Deep and liquid FX markets
- International banking relationships
- Cross-border settlement infrastructure
- Clearing arrangements
- Reliable liquidity
- Direct currency-pair trading
- Wider offshore yuan availability
- Greater participation by global financial institutions
The latest Shanghai Clearing House expansion addresses part of that infrastructure.
The first-day volume was relatively modest compared with the scale of global FX markets, but the significance lies in the architecture being built around the yuan.
Bullish Sentiment
1. Yuan Clearing Infrastructure Is Expanding
The addition of SGD, NZD and THB to the CCP clearing system broadens the currencies that can be handled through China’s domestic FX infrastructure.
That supports the longer-term development of yuan-based regional trade settlement.
2. Greater Direct Trading Could Reduce Dollar Dependence
If Chinese banks and their trading partners increasingly transact directly between local currencies and the yuan, there may be less need to convert through the U.S. dollar for some regional transactions.
This is a gradual structural process rather than an immediate shift in global reserve-currency dynamics.
3. Regional Trade Supports Yuan Usage
China’s extensive trade relationships throughout Asia provide a natural base for greater RMB settlement.
The expansion into Singapore, New Zealand and Thailand strengthens that regional network.
4. US-China Negotiations Could Reduce Near-Term Risk
Bessent and He Lifeng are scheduled to meet ahead of the September 24 Trump-Xi summit. The talks are intended to prepare the ground for the leaders’ meeting, with trade and technology issues among the subjects under discussion.
If negotiations produce greater clarity around tariffs and trade restrictions, that could reduce one source of uncertainty for the yuan.
Bearish Sentiment
The yuan’s gains are not without significant risks.
1. US-China Trade Relations Remain a Major Variable
The upcoming negotiations involve unresolved issues including trade, technology and rare-earth supply chains.
Any deterioration in negotiations could increase demand for the U.S. dollar as a defensive asset and put renewed pressure on the yuan.
2. Internationalisation Does Not Automatically Mean Yuan Appreciation
China can increase the international use of the yuan without necessarily seeking a continuously stronger currency.
Currency internationalisation and the exchange-rate level are related but separate policy objectives.
3. Dollar Liquidity Remains Dominant
The U.S. dollar continues to sit at the centre of global foreign-exchange markets.
The expansion of yuan clearing therefore represents incremental diversification rather than an immediate restructuring of the international monetary system.
4. Global Investors Remain Sensitive to China Growth
The yuan is ultimately connected to expectations for Chinese economic growth, capital flows, exports and domestic demand.
If investors become more concerned about China’s growth outlook, greater yuan infrastructure alone would not necessarily prevent selling pressure.
The Trump-Xi Summit Adds a Major FX Catalyst
The yuan is also entering a politically significant period.
U.S. Treasury Secretary Scott Bessent is scheduled to meet Chinese Vice Premier He Lifeng this weekend for preparatory talks ahead of the September 24 meeting between Trump and Xi.
The agenda is expected to include economic and trade issues, while AI competition and technology restrictions are also becoming increasingly important areas of discussion. Reuters reports that AI rivalry will be a central issue in the leaders’ upcoming talks.
The currency market will therefore be watching not only for formal agreements but also for changes in the tone surrounding:
- Tariffs
- Chinese exports
- Rare-earth restrictions
- Technology controls
- Agricultural trade
- Investment
- AI-related restrictions
- The broader U.S.-China trade framework
Any meaningful shift in expectations could quickly affect CNH volatility.
Onshore CNY vs Offshore CNH
One important distinction for traders is the difference between China’s onshore yuan (CNY) and the offshore yuan (CNH).
The offshore market operates outside mainland China’s capital controls and is heavily influenced by international investors, banks and corporations.
The onshore market remains more closely connected to China’s domestic monetary and FX framework.
That makes CNH particularly useful as a real-time gauge of international sentiment toward the yuan.
When CNH strengthens toward 6.70, traders are effectively signalling greater demand for the offshore yuan relative to the dollar.
However, the relationship between CNY and CNH can change depending on expectations surrounding Chinese policy, capital flows and U.S.-China relations.
Why the 6.70 Level Matters
The move toward 6.70 per dollar puts the yuan near an important psychological area for FX traders.
A sustained move through major round-number levels can influence positioning, corporate hedging and expectations about the next phase of yuan trading.
But traders should distinguish between a short-term move in CNH and the longer-term structural story.
The immediate question is whether the yuan can maintain its strength as markets approach the Bessent-He talks and September 24 summit.
The longer-term question is whether China’s expanding clearing infrastructure can translate into materially greater international RMB usage.
China Is Building a Regional FX Network
The latest clearing expansion fits into a broader strategy of developing China’s financial links with regional trading partners.
The first-day clearing volume of RMB 996 million should not be interpreted as evidence of a major shift in global FX flows by itself.
Its importance is that the mechanism now exists.
As more banks participate and additional currencies are added, transaction volumes can potentially increase.
That creates a network effect:
More currencies → more direct trading opportunities → more RMB settlement → greater yuan liquidity → potentially broader international usage.
Whether that ultimately develops into a meaningful alternative channel to dollar-based settlement will depend on liquidity, market confidence, convertibility and the willingness of international companies and banks to use the yuan.
What Traders Are Watching Next
The next major catalysts for CNH include:
- Bessent-He Lifeng talks this weekend.
- Trump-Xi summit on September 24.
- Any announcements on tariffs or trade restrictions.
- China’s policy guidance toward the yuan.
- Further expansion of yuan-based FX clearing.
- Chinese economic and trade data.
- Offshore CNH liquidity and positioning.
- USD/CNH around the 6.70 area.
- Capital flows into and out of Chinese assets.
- Further development of direct RMB trading with Asian currencies.
The September 24 summit is particularly important because any change in expectations around U.S.-China trade relations could affect both the yuan and broader Asian currencies.
Currency Hedger View
The latest yuan move highlights an increasingly important issue for international businesses: currency infrastructure is becoming part of the competitive landscape.
China’s expansion of direct clearing arrangements means businesses trading with Chinese counterparties have more potential avenues for conducting transactions involving RMB.
For companies with exposure to China, the relevant question is no longer simply whether USD/CNH rises or falls.
Businesses also need to consider:
- Whether invoices are denominated in USD or RMB
- The timing of RMB receipts and payments
- CNH versus CNY exposure
- Forward hedging
- Multi-currency settlement
- Counterparty liquidity
- Cross-border payment costs
Currency Hedger specialises in foreign exchange exposure, currency risk and hedging strategies for businesses operating across international markets.
Today Markets View
The offshore yuan’s move toward 6.70 per dollar is taking place against a much bigger structural development.
China is continuing to build the infrastructure needed to increase the yuan’s role in regional trade and financial markets, with Shanghai Clearing House now supporting CCP clearing for Singapore dollars, New Zealand dollars and Thai baht.
At the same time, the currency faces an immediate external test as U.S. and Chinese officials prepare for the September 24 Trump-Xi summit.
The two stories are connected but should not be confused.
Yuan internationalisation is a long-term structural project.
CNH exchange-rate movements are a short-term market phenomenon.
The expansion of clearing infrastructure can support the first, but the second will continue to respond to trade negotiations, interest-rate differentials, capital flows and investor expectations.
“The significance of China’s latest FX-clearing expansion is less about the first-day transaction volume and more about the financial network being built around the yuan. At the same time, CNH traders remain focused on the immediate catalyst: whether upcoming U.S.-China talks reduce or increase trade uncertainty.”
— Louis Roche, Analyst, Today Markets
Bottom Line
The offshore yuan is edging higher toward 6.70, but the bigger story is China’s continued expansion of the financial infrastructure supporting international RMB usage.
The addition of Singapore dollar, New Zealand dollar and Thai baht clearing gives Chinese and regional banks another mechanism for direct FX settlement through yuan-linked infrastructure. The first session generated approximately RMB 996 million of cleared transactions across 12 participating banks.
That is unlikely to transform global FX markets overnight.
But it represents another step in China’s longer-term effort to expand the yuan’s international role.
In the near term, however, U.S.-China relations remain the dominant market catalyst.
The Bessent-He Lifeng talks this weekend and the September 24 Trump-Xi summit could influence expectations around tariffs, trade, technology and capital flows — all of which can feed directly into CNH.
For yuan traders, the next few sessions therefore offer a rare combination of structural currency-market development and immediate geopolitical-economic catalysts.
Market analysis contributed by Currency Hedger, an Octalas Group division specialising in foreign exchange, currency risk and hedging.
Analysis by Louis Roche, Analyst, Today Markets
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