The offshore yuan strengthened to around 6.87 per dollar on Monday, extending gains from the previous week in thin holiday trading, even as geopolitical risks remained elevated. Tensions in the Middle East continue to cloud market sentiment, with US allies such as Pakistan, Egypt, and Turkey reportedly working to broker a roughly 45-day ceasefire aimed at averting potential US strikes on Iran’s energy infrastructure and possible retaliation from Tehran.
The latest developments follow President Donald Trump’s decision to extend his deadline to Tuesday for Tehran to reopen the Strait of Hormuz. However, Iran has rejected Washington’s ultimatum, stating it will only fully reopen the waterway once war-related damages are compensated. Domestically, investors are turning their focus to upcoming inflation data due later this week. Consumer inflation is expected to ease slightly, while producer prices are projected to post its first annual increase since September 2022.
