Offshore Yuan Slips to 6.80, Marking One-Month Low Amid Dollar Strength

The offshore Chinese yuan weakened to around 6.80 per dollar on Wednesday, hitting its lowest level in a month, as sustained strength in the U.S. currency continued to pressure the exchange rate.

According to Trading Economics data, the offshore yuan traded in a range of 6.7756 to 6.7978 during Tuesday’s New York session, approaching the June 19 bottom of 6.7980 and the May 22 trough of 6.8034.The breach of the 6.80 psychological barrier suggests the pair may face further selling pressure in the near term if dollar strength persists.

The greenback remained firmly supported by mounting expectations that the Federal Reserve could raise interest rates in September, with markets now pricing in roughly a 70% probability of a rate hike.For July, markets are assigning a 37% chance of a 25-basis-point hike, up sharply from just 8.5% a week ago.The dollar index, which measures the greenback against a basket of major currencies including the yen and the euro, climbed to a high of 101.44 on Wednesday—its strongest level since May 13, 2025.

“The U.S. dollar is still the preferred safe-haven. Obviously the momentum is on its side at the moment,” said Ray Attrill, head of FX strategy at National Australia Bank.

Further downward pressure on the yuan came from the People’s Bank of China, which has been setting the daily reference rate at weaker-than-expected levels. On Wednesday, the central bank fixed the yuan at 6.8195 per dollar, extending its longest streak of softer fixings since April 2025.The fixing came in significantly softer than the Reuters estimate of around 6.7913.The PBOC also injected 662.5 billion yuan via 7-day reverse repos in open market operations on Wednesday, holding the rate unchanged at 1.4%, signaling a cautious approach to liquidity management while allowing the currency to find its own level.

Analysts at United Overseas Bank noted that USD/CNH spiked to 6.7980 before reversing, leaving the pair broadly unchanged near 6.78.They see room for a short-term correction within a 6.7740 to 6.7900 range, but expect another test of the 6.8000 level over one to three weeks, as long as support at 6.7600 holds.

Adding to the yuan’s downward pressure are geopolitical factors. China has effectively suspended certain tungsten exports to Japan, while rare-earth magnet shipments fell to a one-year low in May, when Beijing first rolled out its global export-control regime. These restrictions have remained in place amid heightened tensions following Taiwan-related remarks by Japanese Prime Minister Sanae Takaichi.

Looking ahead, the trajectory of the yuan will largely depend on Fed policy signals, the PBOC’s willingness to defend the 6.80 level, and the evolution of geopolitical tensions that could further impact China’s trade dynamics.