The yuan in the offshore Hong Kong market strengthened to a seven-month high against the greenback on Tuesday. Beijing previously burned through its forex reserves to defend the yuan, but the tactic raised doubts about whether hard-earned reserves should be wasted on day-to-day interventions.
A stronger yuan would also give the market more confidence to raise positions in the yuan rather than the dollar. The Chinese leadership is also preparing for a big reshuffle later this year, putting a priority on stability over liberalisation.
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