LONDON: The Chinese yuan may struggle to maintain the pace of its appreciation against the US dollar and could even give back some of its gains.
The dollar/yuan exchange rate has fallen 1.75 percent since July 25. And on Friday, the appreciating yuan reached its strongest against the dollar since China established the domestic foreign exchange market in 1994.
The scale of the moves may not be huge compared with those seen in other currency pairs but the measured pace encourages traders to take on larger positions. And the bigger the position, the bigger the exposure to any reversal.
While the yuan's gains can be attributed to natural demand before a week-long holiday in China and quarter-end window dressing by the Chinese central bank to spike the arguments of US critics, it is unlikely to be sustainable given the challenges the Chinese economy currently faces.
Some traders already expect the central bank, the People's Bank of China (PBOC), to act to cool demand for the yuan as soon as next week, possibly even by intervening to curb the pace of its appreciation.
The PBOC may have every justification to do so.
China's economy will almost certainly have suffered a seventh straight quarter of slowing growth in the three months to the end of September.
The HSBC China Manufacturing purchasing managers index (PMI) released on Saturday, and Monday's official factory PMI, both stayed below 50, the level which separates expansion from contraction.
Even though both recorded a final index level that was above the August reading, the reports highlighted the problems facing the Chinese economy.
Notably, the HSBC PMI's export orders sub-index slid to a three-and-a-half-year low of 44.9.
With exports generating 31 percent of China's gross domestic product in 2011, according to World Bank data, that slide is not good news. And the yuan's strength is not going to help.
Other data also suggest the Chinese economy is losing momentum.
A further slowing in Chinese growth for the ninth consecutive quarter was already flagged in the Chinese media by a government think tank on Wednesday.
Chinese factory output languished at 39-month lows in August while industrial profits fell 6.2 percent in the same month, compared to a year earlier.
Baoshan Iron & Steel Co., China's biggest listed steelmaker, has already suspended output at a 3 million ton-a-year plant in Shanghai as steel prices approach three-year lows.
About 40 percent of Chinese iron ore mines have halted their operations.
Against this economic background, the Chinese yuan's strength against the US dollar may seen unsustainable.
An October rebound in the dollar, say to the 200-day moving average, which is currently at 6.3302 yuan, would leave China's currency looking more appropriately valued and catch yuan longs unawares.
— Neal Kimberley is an FX market analyst for Reuters. The opinions expressed are his own.
Chinese yuan strength may soon wane
Chinese yuan strength may soon wane
Red Sea’s oxygen balance under strain, experts warn
- Scientists say warming waters, nutrient runoff and coastal development could quietly erode coral resilience
RIYADH: The Red Sea may not have dead zones, but its fragile ecosystem is vulnerable to oxygen depletion — a quiet decline that can undermine coral health and disrupt marine life.
Sea dead zones are hypoxic or low-oxygen pockets that form most often when nutrient pollution — especially nitrogen and phosphorus from farm runoff and wastewater — fuels blooms that ultimately strip oxygen from the water.
Experts say the risk is not inevitable, but it depends on earlier detection and tighter control of the conditions that drain oxygen from coastal waters.
A sea that relies on its own “breathing” is also a sea shaped by geography.
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- The Red Sea is naturally low in oxygen because of its warm waters and high salinity — making it especially vulnerable to further oxygen decline.
- The Red Sea’s narrow Bab Al-Mandab strait limits deepwater exchange, meaning the basin largely depends on its own internal circulation to ‘replenish’ oxygen.
- Saudi Arabia’s coastline features steep underwater drop-offs, allowing deep, oxygen-poor water to move closer to coral reefs near shore.
Matheus Paiva, a senior oceanographer, told Arab News that “the Red Sea’s shallow Bab Al-Mandab choke point limits deepwater exchange,” meaning oxygen replenishment depends heavily on internal overturning circulation.
He said this circulation is driven as surface waters flow north, cool, become denser and sink, helping ventilate deeper layers through vertical mixing.
Paiva said the Saudi coastline’s underwater topography makes the risk more immediate close to shore.
“Unlike regions with wide, gradual shelves, our coast features narrow fringing reefs that drop sharply into deep water via steep underwater cliffs and canyons,” he said.
“This ‘step-and-drop’ topography brings deep oxygen-poor water close to shore.”
Paiva said warming at the surface can intensify stratification and reduce vertical mixing. He said that can allow low-oxygen water to creep upslope and affect shallower reef zones.
How oxygen gets consumed faster than it’s replaced is where human pressure can tip the balance.
Carlos Duarte, executive director or the Coral Research and Development Accelerator Program at KAUST, told Arab News that the Red Sea’s baseline conditions create vulnerability. “Because of its warm waters and high salinity, the Red Sea is inherently low in oxygen and, therefore, vulnerable to processes that decline oxygen further.”
He said algal blooms and heat waves raise biological oxygen demand, linking low oxygen to coral mortality.
Duarte said human-driven nutrient and organic inputs can intensify these declines.
He said poorly managed urban development and aquaculture operations can contribute nutrient and organic loads that fuel algal blooms.
Duarte said that as bloom material decomposes, it strips oxygen from the water and can lead to hypoxia.
The Red Sea’s celebrated clarity reflects a naturally nutrient-poor system. “The risk is amplified because the Red Sea is naturally oligotrophic. It is nutrient-poor and crystal clear,” Paiva said.
He added that wastewater releases and heavy rain events that trigger flash floods can push large nutrient loads into coastal waters in a short time.
In turn, those pulses can threaten biodiversity and the marine environment that underpins tourism investments along the Kingdom’s Red Sea coast.
Seeing low oxygen coming — rather than reacting after the fact — is the promise of new monitoring and analytics.
Paiva said high-accuracy oxygen data still relies on direct measurements collected during vessel surveys.
“We still depend heavily on classic vessel surveys,” he said. Teams deploy multiparameter sondes to profile the water column and collect water samples to establish a baseline.
“This ‘water-truthing’ remains the industry standard for high-accuracy data,” he said.
Saeed Al-Zahrani, general manager for Saudi Arabia at NetApp, said continuous data can help teams intervene earlier. “Oxygen depletion is rarely sudden; it tends to build over time when conditions line up,” he said.
Al-Zahrani said AI can flag anomalies, learn what “normal” looks like in specific locations, and generate short-horizon risk forecasts.
He added that it creates a decision window — guidance on when to increase sampling, where to focus response efforts, and when to tighten controls around discharges.
Coastal development that reduces oxygen risk starts, Duarte said, with what never reaches the sea.

Duarte said Saudi Arabia’s west coast investments have an advantage compared with older coastal destinations: the opportunity to design sustainability into projects from the outset rather than trying to retrofit after degradation becomes evident.
Duarte said nutrient control is a direct lever to reduce oxygen-depletion risk. “Achieve circular economies where organic products and nutrients are recycled and reused in the system to avoid discharging nutrients to the marine environment,” he said.
Al-Zahrani said wastewater and environmental systems produce huge volumes of information, but fragmentation can slow decisions.
He said connecting data in near real time can help detect problems earlier and anticipate load spikes tied to rainfall, tourism peaks, or industrial activity.
Reef resilience depends on reducing stress before heat and low oxygen overlap.
Duarte told Arab News: “Coral reefs are extremely vulnerable to oxygen depletion.” He added that it can contribute to bleaching and mortality in a warmer ocean.
He said marine heat waves can worsen oxygen stress by reducing oxygen solubility and limiting ventilation of subsurface waters, while increasing oxygen demands of organisms.
Duarte said reducing nutrient inputs and managing reefs to avoid excessive growth of seaweed can build resistance.
He also said models that account for how waves and currents interact with reef topography — work he said is being developed at KAUST — can help guide restoration toward sites more likely to remain oxygenated during heat stress.









