The offshore yuan weakened to around 7.18 per dollar on Monday, reversing gains from the previous session, as renewed safe-haven demand amid escalating geopolitical tensions lifted the US dollar. The US launched airstrikes on three Iranian nuclear sites, marking its direct entry into the Israel-Iran war despite Trump’s earlier vows to avoid new conflicts.
The strikes marked a major escalation, raising fears of a broader regional confrontation and triggering a surge in oil prices. The US now calls on China to prevent Iran from closing the Strait of Hormuz in retaliation. About 20% of global oil flows through the strait, a key route for China—which sources 45% of its oil imports via the passage—making any disruption a potential trigger for inflation and downward pressure on the yuan. Meanwhile, the yuan found some support after China expanded its cross-border yuan payment system by adding six financial institutions from Africa, the Gulf, and Central Asia to boost the yuan’s global role.
