The offshore yuan weakened to around 6.80 per dollar on Friday and was on track for a second consecutive weekly loss, remaining under pressure from a broadly strong US dollar. The greenback continued its momentum after the Federal Reserve recently adopted a more hawkish stance, leading markets to price in a 75% probability of a rate hike as early as September. Meanwhile, the People’s Bank of China unveiled plans to introduce overnight reverse repo operations on June 29–30 as part of the next phase of its monetary policy framework reform. This will complement the existing seven-day reverse repo rate, bringing the PBOC’s policy toolkit more closely in line with those of major central banks, including the Federal Reserve. On the economic front, fiscal expenditure rose 0.8% year-on-year to CNY 11.39 trillion ($1.59 trillion) in the first five months of 2026. Central government spending increased 6.5% to CNY 1.68 trillion, while local government expenditure fell 0.1% to CNY 9.71 trillion.

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