Yuan Rises to Three-Year High Amid Economic Resilience to Oil Price Surge
The Chinese yuan reached its strongest level in nearly three years on Monday, March 17, 2026, demonstrating resilience despite escalating tensions in the Middle East and a subsequent rise in oil prices. This performance suggests China’s economy is proving less sensitive to geopolitical factors than some other Asian nations.
The onshore yuan’s exchange rate against the U.S. Dollar depreciated 0.23% during trading on Monday, closing at 6.9200 yuan per dollar, according to the China Foreign Exchange Trade System. The offshore yuan likewise weakened, falling 0.31% to 6.9241 yuan. Despite these declines, the overall trend indicates a strengthening yuan.
China’s central bank, the People’s Bank of China, adjusted the yuan’s reference exchange rate to 6.9158 yuan per dollar, a 0.19% weakening and the largest such adjustment since November 2024. This move, 77 basis points weaker than the market’s predicted 6.9116 yuan, signals a degree of acceptance of the dollar’s strength, according to market observers.
Analysts at Aosheng Bank Asia Research Head Khoon Goh noted that Monday’s midpoint setting was largely in line with expectations, indicating that counter-cyclical factors remain inactive and regulators are allowing the yuan to adjust to the strengthening dollar. He added that intervention to stabilize the yuan is anticipated should the dollar appreciate too rapidly.
The 12-month non-deliverable forward (NDF) rate for the yuan against the dollar stood at 6.7816 yuan, suggesting traders anticipate the yuan will appreciate approximately 2.00% over the next year.
The yuan’s stability is partly attributed to China’s increasing use of the currency in trade settlements and a growing trend among importers and exporters to hedge their foreign exchange exposure. This has lessened the impact of exchange rate fluctuations on corporate profits, reducing the pressure on regulators to intervene.
According to a report by OCBC Bank, China’s relatively low reliance on oil and natural gas in its energy mix contributes to its lower sensitivity to potential disruptions in the Strait of Hormuz compared to many other Asian countries.
The situation in the Middle East continues to be a key factor influencing currency markets, with concerns about a prolonged conflict driving up oil prices and bolstering the dollar. The ongoing instability is creating headwinds for regional currencies.
