Europe gets the yuan rise it wants — just not the way it wanted
SPY•The offshore yuan has strengthened against the euro, which has fallen to a 3½-year low amid French debt tensions. The yuan has risen as much as 10% against the euro over 12 months, including 5% in the past six weeks, while an EU-China deal caps Chinese hybrid-car imports at 350,000 a year.
1. Yuan gains against euro
The offshore yuan hit its highest level against the euro since April 2023 on Monday, as French budget and bond-market problems added to pressure on the single currency. The yuan has appreciated as much as 10% against the euro over the past 12 months, including a 5% move in the past six weeks.
2. Trade tensions and car imports
European leaders have argued that the yuan is undervalued, while anxiety about a new wave of Chinese exports has grown amid Beijing’s trade standoff with Washington. On Friday, the EU and China reached a deal limiting Chinese hybrid-car imports to 350,000 vehicles a year, likely from early December, with a 6% annual increase thereafter. Chinese exports of hybrids to the EU reached $7.5 billion in the first half of the year, up from $2.5 billion a year earlier.
3. Durability remains uncertain
The yuan’s real effective exchange rate has risen more than 8% since the aftermath of last year’s tariff shock, reaching its strongest level in two years. The article says the currency’s further movement against the euro may depend on whether French budget tensions ease and on how China weighs currency appreciation against keeping trade routes open.
