China's currency maneuvers threaten export strength

China's strict control over the onshore yuan brings unintended side effects that could jeopardize efforts to revive the economy—the weakened competitiveness of exporters. The yuan has reached its strongest level since October 2022 compared to a basket of trading partners' currencies, including the South Korean won and the euro. This is according to a Bloomberg tracker of the CFETS index. The reason for this development is the policy of the Chinese central bank, which has set a lower limit of 7.3 yuan per dollar since December, while the US dollar rebounds. These measures lead to an unexpected strengthening of the yuan, which potentially challenges China's exporters.