China's Yuan Strengthens Against Dollar: What it Means for Global Trade and Exports

• China's yuan reached its strongest fixing against the US dollar in years, dipping below the 7-per-dollar threshold, a key psychological marker.
• The People’s Bank of China (PBoC) fixed the yuan’s rate, signaling a shift from keeping the currency weak to support exporters.
• A stronger yuan makes Chinese goods more expensive globally, potentially narrowing the cost advantage for exporters, especially in price-sensitive sectors.
• The move comes amid questioning of the dollar’s unassailable position due to US political and economic pressures, making alternatives like the yuan marginally more attractive.
• China's strategy reflects a careful calibration to manage domestic export costs while leveraging global shifts away from singular dollar reliance.

Why It Matters: China's yuan strengthening signals a strategic shift, impacting global trade dynamics and dollar dominance.