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The Chinese yuan has remained under pressure against the dollar as traders await Chinese government meetings and decisions.
President Xi Jinping is set to unveil strategies to support economic growth. These measures could provide long-term stability for the yuan and bond yields.
However, ongoing global challenges and trade tensions may limit their immediate impact.
China’s fiscal stimulus plans, including a budget deficit increase and new special bond issues, may support the Chinese currency in the short term by stimulating domestic demand.
However, the issuance of new debt could cap bond yields, with market sentiment depending on the effectiveness of fiscal measures and the resolution of trade conflicts.
Following last week’s depreciation, the yuan could find support in the rise of the manufacturing PMI to 50.8 points in February. However, the ongoing challenges, such as rising input costs, could weigh on the economy, potentially exerting pressure on the Chinese currency.
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