The offshore yuan weakened to around 6.92 per USD on Monday, hitting a four-week low as market uncertainty intensified after oil surged further amid the escalating Middle East war, while investors weighed latest domestic inflation numbers. Data showed China’s consumer inflation accelerated to a three-year high in February, rising 1.3% year-on-year, sharply above January’s 0.2% and forecasts of 0.8%, supported by stronger holiday spending. Meanwhile, factory-gate deflation persisted but eased, falling 0.9% from a year earlier, a smaller drop than January’s 1.4% decline and the expected 1.2% fall, pointing to some stabilization in upstream price pressures. On the geopolitical front, the US-Israeli war with Iran entered its second week with no clear resolution, while major oil producers in the Middle East have been curbing production as shipments through the Strait of Hormuz have been halted. China, the world’s largest energy importer, is partly cushioned by its sizable crude reserves.
