HONG KONG: The yuan strengthened against the dollar on Friday and looked set for its first weekly gain in over a month, after a slew of data showed China’s economy ended 2024 on better footing than expected.
China’s economy grew 5.4% in the fourth quarter from a year earlier, and expanded 5.0% for the full-year 2024, meeting the government’s annual growth target of around 5%, data from the National Bureau of Statistics data showed on Friday.
Factory output and retail sales in December also came above expectations, suggested the economy gained traction heading into the new year thanks to a flurry of government support measures.
By 0230 GMT, the yuan was 0.06% higher at 7.3271 to the dollar, 45 pips firmer than the previous late session close and on track to end a four-week losing streak.
Still, the currency has lost 0.4% against the dollar this month to hover near a 16-month low, as outflow pressure remains amid fears of US tariffs and falling bond yields at home.
Most investors expect the yuan to continue to weaken against the dollar and the 10-year government bond yield to trend lower due to persistent growth pressure this year, Goldman Sachs said in a note.
Chinese government 10-year bond yields fell 2.4 basis points to 1.63%. The yield on similar US government benchmark debt was 4.6%.
Prior to the market opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1889 per dollar.
China’s yuan steady on PBOC guidance; outlook shaky on US tariff risks
The central bank has kept a firm hand on its daily yuan official guidance, suggesting it is unwilling to see a big depreciation before US President-elect Donald Trump takes office on Jan. 20, analysts said.
The offshore yuan traded at 7.3397 yuan per dollar, up about 0.08% in Asian trade.
The dollar’s six-currency index was 0.055% lower at 108.91.
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