Firmer yuan fuels Chinese share gains on bets Beijing will tolerate appreciation

The broad-based CSI 300 Index rose less than 0.1 per cent to 4,643.95 at noon trading break, adding to a 0.2 per cent rise a day earlier. The Shanghai Composite Index was down 0.2 per cent. Hong Kong’s market was closed on Thursday and Friday for the Christmas holiday.

Among major gainers, electric-vehicle maker BYD jumped 5.3 per cent to 99.83 yuan, while peer Great Wall Motor advanced 3 per cent to 22.84 yuan. Solar photovoltaic inverter maker Sungrow Power Supply surged 8.9 per cent to 182.82 yuan, and lithium producer Ganfeng Lithium Group gained 3.8 per cent to 68.63 yuan.

Among major losers, Shennan Circuits slipped 1.4 per cent to 221.30 yuan, while Zhongji Innolight fell 2.4 per cent to 624.21 yuan and Eastroc Beverage declined 1.2 per cent to 268.86 yuan.

The offshore yuan climbed past the key 7-per-dollar level on Thursday for the first time since September 2024, after the People’s Bank of China set its daily fixing at the strongest level in more than three months. The move fuelled speculation that policymakers may be willing to allow a measured appreciation to shore up market confidence.

“The yuan has been on a steady appreciation trend against the US dollar, with the offshore yuan breaking above the key 7-per-dollar level. That has eased pressure from foreign capital outflows and fuelled expectations of incremental inflows to support index gains,” strategists from Yinda Securities said in a note. “Policy support and currency strength are reinforcing each other, helping drive the market’s recent rebound.”