China’s currency is outperforming the euro and yen despite weak economic fundamentals, with analysts pointing to Beijing’s geopolitical leverage as the driver.

China’s central bank has set the yuan’s daily reference rate against the US dollar at the strongest level in more than a year, with analysts expecting room for appreciation should a December rate cut by the US Federal Reserve weaken the dollar. The People’s Bank of China set the yuan’s midpoint rate, also known as the daily fixing rate, at 7.0796 to the US dollar on Wednesday – the strongest showing since October 2024. The decision followed a 0.34 per cent rally in the offshore yuan on Tuesday,…

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