The Chinese yuan has continued to strengthen against the U.S. dollar, with the exchange rate of both the onshore and offshore yuan surpassing the 7.17 level on Tuesday morning, the highest levels in nearly six months, according to a report from the Securities Times on Tuesday.
As of press time on Tuesday, the yuan's onshore exchange rate stood at around 7.18, while the offshore exchange rate was at around 7.19.
On Tuesday, the central parity rate of yuan was set at 7.1876, according to the People's Bank of China, the central bank.
Since the start of May, the momentum of yuan appreciation has significantly increased, according to the Securities Times.
Xi Junyang, a professor at the Shanghai University of Finance and Economics, said that China's strong economic fundamentals have shored up the yuan's performance, and the Chinese currency has the condition to maintain long-term stability.
"In the long run, the yuan has shown smaller fluctuations and greater stability compared with other currencies, making it less risky to hold and less prone to significant depreciation," said Xi Junyang, noting that with the acceleration of the yuan's globalization, Chinese assets are set to play a more crucial role in hedging against global uncertainties.
Among recent strong data, net profits of major enterprises above the designated size rose by 3.0 percent year-on-year in April, up by 0.4 percentage points from March, while the January-April period saw a 1.4-percent profit increase, 0.6 percentage points faster than in the first quarter, the National Bureau of Statistics said on Wednesday.
Along with China's first-quarter GDP growth of 5.4 percent, analysts said that global investors' confidence is being further boosted.
Meanwhile, China's financial regulators on May 7 implemented a package of supportive financial policies, including cuts to the reserve requirement ratio and interest rates, to further strengthen support for the real economy.
As these measures take effect, China's economic recovery is expected to gain further momentum, providing a stronger foundation for stabilizing the foreign exchange market, an official of the State Administration of Foreign Exchange said, while noting that the nation's foundation for the stable operation of the foreign exchange market will continue to be strengthened.
Strategists at Goldman Sachs wrote that Chinese stocks are expected to benefit from further gains in the yuan, which has been showing resilience amid the country's trade spat with the U.S., Bloomberg reported on Tuesday.
Aside from domestic supportive factors for the yuan, the reciprocal tariff measures introduced by the U.S. led to a decline in global confidence in the dollar, which has reinforced the yuan's position in global markets, according to Xi Junyang.
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