The Chinese yuan reached its highest level against the US dollar in more than four years during Monday trading, while Chinese stocks edged higher, supported by data showing stronger-than-expected economic growth in the third quarter. The figures eased pressure on policymakers to provide additional stimulus, although concerns remain over weak domestic demand and declining sentiment toward the artificial intelligence-related technology sector.
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China’s economy grew 4.5 percent year-on-year in the third quarter of 2026, exceeding expectations, while retail sales accelerated in September, strengthening expectations for improved economic activity in the coming months.
Analysts at Capital Economics said in a note that September data indicated the economy regained momentum toward the end of the third quarter. They expect growth to accelerate in the coming months as the effects of increased government fiscal support begin to emerge.
In the foreign exchange market, the yuan opened in the domestic market at 6.6853 per dollar before strengthening to 6.6826 by 02:15 GMT, its strongest level since July 2022. The offshore yuan also rose to around 6.6819 per dollar, gaining approximately 0.08 percent during Asian trading.
The People’s Bank of China set the yuan’s daily midpoint at 6.7208 per dollar, its strongest level since February 2, 2023, although it was around 311 points weaker than Reuters’ estimate.
Analysts at Huatai Futures said China’s trade surplus and companies converting their dollar revenues into yuan remain among the key factors supporting the currency. However, they noted that the continued widening of the interest rate differential between China and the United States, along with the possibility of US Federal Reserve rate hikes this year, could limit the pace of the yuan’s appreciation. They expect the currency to trade within a relatively narrow range rather than continue rising rapidly.
The yuan’s performance came as the dollar declined last week, recording its first weekly drop in more than a month against the euro and yen amid reduced expectations for US interest rate hikes and continued concerns over a sell-off in artificial intelligence-related technology stocks.
Investors are turning their attention to a major financial forum in Beijing on Monday, where the governor of the People’s Bank of China and the head of the State Administration of Foreign Exchange are scheduled to speak. Markets are looking for signals on monetary policy and exchange-rate policies.
The central bank governor pledged last week to continue opening China’s financial markets to foreign investors, saying yuan-denominated assets could meet growing global demand for investment diversification amid trade uncertainty.
In the stock market, the blue-chip CSI 300 index rose 0.1 percent by the midday trading break, while the Shanghai Composite gained 0.2 percent. Hong Kong’s stock exchange was closed for a local holiday and will resume trading on Tuesday.
Despite the economic data beating expectations, ANZ analysts warned that economic performance during the first nine months of 2026 continued to reinforce domestic and global concerns over structural imbalances in the Chinese economy. They stressed the importance of continued government fiscal support given limited room for monetary easing and pressures stemming from weak balance sheets.
Meanwhile, the technology-focused STAR 50 index fell 1.7 percent as sentiment toward the artificial intelligence chip supply chain remained weak. Financial stocks and alcohol beverage companies led gains in the domestic market, rising 0.8 percent and 1.4 percent, respectively.
Shares of Unitree rose more than 10 percent, recovering from a record low reached last week, while shares of memory chipmaker CXMT fell 7.6 percent.
The CSI 300 fell 3.4 percent last week, marking its worst weekly performance since mid-July and extending its losses for a 10th consecutive week.
