China is escalating its defense of the yuan, pushing up funding costs in the offshore market to squeeze short positions and setting a new record with its stronger-than-expected reference rate for the currency.
Analysts say the steps are designed to slow the pace of yuan depreciation rather than engineer a sustained rally. Forecasters at JPMorgan Chase & Co., Nomura Holdings Inc. and UBS Wealth Management all predict further weakness in the currency this year. The offshore yuan reversed earlier gains to weaken Tuesday, dropping back toward its 2023 low set last week.