On Tuesday, the Chinese yuan rose to a three-year high of 6.7621 per dollar, reflecting cautious optimism among investors regarding ongoing Middle East peace talks. The offshore yuan also followed suit, trading at 6.7609. This increase comes amid a partial ceasefire announcement between Hezbollah and Israel, contributing to a more stable outlook in the region. However, tensions remain as Iranian state media reported a halt in indirect negotiations with the U.S. regarding the conflict. Analysts from ANZ have adjusted their forecasts for the yuan, predicting it will strengthen further in the coming quarters, but they maintain a year-end target of 6.70. The People's Bank of China (PBOC) set the midpoint rate at 6.8187, which was weaker than market expectations. The yuan's trade-weighted value against major trading partners has also risen to a near 16-month high of 100.9. While the yuan has gained 3.3% against the dollar this year, analysts warn that excessive strength could undermine China's export competitiveness, prompting the central bank to set softer midpoint fixings to stabilize the currency.