Global Market: Yuan holds steady, set for third weekly gain on robust Chinese exports

Market participants will focus on China's third-quarter gross domestic product data to released next week.

The onshore yuan was trading at 6.6907 per dollar in late-morning trade, little changed from Thursday's close. It earlier strengthened to 6.6897, its strongest level since January 2023, the report stated.

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Before the market opened, the People's Bank of China (PBOC) set the yuan's daily midpoint at 6.7220 per dollar, the strongest fixing since February 2023.

According to Reuters, strong export performance has supported the Chinese currency even as investors assess the outlook for the domestic economy and the direction of US monetary policy.

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China's central bank governor said on Thursday that global economic imbalances could not be resolved through exchange rate adjustments alone, signalling Beijing's reluctance to allow a rapid appreciation of the yuan.

The dollar index retreated from an 18-month low, with profit-taking and dovish remarks from a Federal Reserve official tempering its recent weakness, Nanhua Futures said in a note.

US producer prices rose by the most in four-and-a-half years in September. However, Nomura said the increase was insufficient to justify an interest rate hike by the Federal Reserve in October.

Investors are expected to focus on Federal Reserve Chair Warsh's fireside chat during the International Monetary Fund and World Bank meetings in Bangkok for clues about the US monetary policy outlook.

Market participants will also closely watch China's third-quarter gross domestic product data, scheduled for release on Monday. A Reuters poll of economists showed that China's economic growth was expected to accelerate modestly to 4.4% year-on-year in the July-September quarter, recovering from a more than three-year low.

Meanwhile, Krishna Srinivasan, director of the IMF's Asia and Pacific Department, urged China to provide a larger fiscal stimulus to support its struggling economy.

Despite domestic challenges and mounting international trade pressures, China's export performance has remained resilient. Pantheon Macroeconomics said Chinese exports had continued to advance despite higher tariffs, growing international pressure to rebalance trade, rising export prices and a steadily appreciating yuan, as per the report.

Strong exports have helped underpin the currency, although the outlook will depend on incoming economic data, global financial conditions and Beijing's approach to managing the yuan's appreciation.