The onshore yuan jumped by 648 basis points against the greenback to the highest in over one week yesterday as the latter fell on heightened expectations the US Federal Reserve will be less aggressive with monetary policy.
The yuan rose to 6.9005 per US dollar and other major currencies also rose versus the US counterpart.
Goldman Sachs economists said they no longer expect the Fed to deliver a rate increase next week, even after US authorities moved to contain a crisis spurred by the exodus of depositors from Silicon Valley Bank and Signature Bank.
Traders are now rapidly shifting back to betting on Fed rate cuts for the second half of this year.
The risk of a banking crisis underscores the tension between Fed efforts to tame inflation with concerns that 4.5 percentage points of rate hikes in the space of a year will spark a recession and a rout in riskier assets.
