SHANGHAI: China’s yuan firmed to a fresh 34-month high on Wednesday, underpinned by corporate demand for the currency and firm export expectations. The onshore yuan advanced to 6.8703 per dollar, the strongest level since April 18, 2023, extending gains after the Lunar New Year break, while the offshore unit rose to 6.8665, also the highest since that date. Corporate needs may remain a key driver of the yuan’s strength, said analysts at Nanhua Futures in a note. “Markets will watch firms’ appetite to sell or buy foreign currencies; as seasonal settlement fades, the correlation between USD/CNY and the US dollar index is likely to strengthen,” they said. Companies, particularly exporters, typically need yuan around the Lunar New Year holidays to meet various obligations such as employee wages, supplier payments and bonuses. The yuan also drew support from bets a US Supreme Court ruling against President Donald Trump’s tariffs could bolster Chinese exports. The US Supreme Court on Friday struck down Trump’s emergency tariffs, prompting the president to pledge a new 15% levy on US imports from all countries. “The fundamental underpinnings for our CNY appreciation view— a starting point of deep currency undervaluation and the remarkable strength of the export sector — remain very much in place and argue for continued CNY outperformance,” analysts at Goldman Sachs said in a note. The spot yuan opened at 6.8796 per dollar and was trading at 6.8721 as of 0310 GMT, 91 pips firmer than the previous late session close. The yuan is up 1.1% against the dollar this month, and 1.8% firmer for the year. Prior to the market opening, the People’s Bank of China set the midpoint rate at 6.9321 per dollar, its strongest since May 11, 2023. But the fix was 497 pips weaker than a Reuters’ estimate, the largest deviation since January 28, suggesting the authorities may not welcome a sharp rally. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. Over the past decade, by metrics such as economic growth, balance of payments and inflation, the yuan has had ample grounds for moderate appreciation, Lian Ping, chief economist of Guangkai Chief Industry Research Institute, said in a local media post published on Wednesday. “But sustained US pressure has kept the currency under strain, and a period of moderate yuan strength would be a natural next step.” The offshore yuan traded at 6.869 yuan per dollar, up about 0.17% in Asian trade. The dollar index, which measures the greenback against a basket of six currencies, was 0.141% lower at 97.75.