China's yuan not far from a 4 month high - policy support, COVID recovery, seasonal demand

China's yuan has gained to a four month high. Analysts citing:

1. policy support for the economy:

• ICYMI - China's Finance Minister reiterated plans to appropriately expand fiscal spending

2. A potential bounce out of COVID:

• China COVID peak? Nearly a dozen major Chinese cities are reporting recovery in subway use

3. Seasonal demand:

• ING on why demand for yuan in the onshore market should increase

Reuters add comments from Citi:

"The People's Bank of China (PBOC) may remain accommodative in the early stage of reopening but gradually turn mindful of inflation risks afterwards," Citi analysts said in a note. "The return of China's growth story is likely to keep its interest rates and stock earnings up and support the RMB."

ANZ ANZ:

"The Chinese yuan has tended to strengthen from the beginning of the year leading into the Lunar New Year holidays," Khoon Goh, head of Asia research at ANZ said in a note. "This is driven by exporters' conversion of accumulated foreign exchange proceeds," he added.

China's New Year holidays begin on January 21 2023.