The Dollar vs. the Yuan: A History of Rivalry, Global Power, and Monetary Strategy
The relationship between the U.S. dollar and the Chinese yuan reflects a complex system of monetary policies, global economic interests, and international politics. Since China began its economic reforms in the 1980s, it maintained a policy of pegging the yuan to the dollar—ensuring a competitive export market and a stable inflow of foreign currency.

In 2005, China shifted its approach, allowing the yuan to move gradually based on trade value. After the 2008 global financial crisis, China allowed the yuan to appreciate slowly, in line with rising domestic demand. More recently, during the COVID-19 pandemic, the yuan held strong due to increased manufacturing and global supply chain dominance.

Two Global Economies: Interdependence and Capital Flows
The economic relationship between the U.S. and China is arguably the most complex in modern history. China is a central global manufacturing hub, supplying affordable goods to Western markets, while the U.S. controls the world’s reserve currency. The dollar serves as a stabilizing force for global trade, while the yuan increasingly positions itself as a global player.

During periods of trade tension—like in 2018–2019—the dollar gained strength against the yuan as investors fled to safe assets. Conversely, when China stimulates domestic growth through fiscal policy or when U.S. monetary expansion weakens the dollar, the yuan tends to appreciate.

Recent Events: Middle East Tensions Boost the Dollar
According to the article you shared, following U.S. airstrikes on nuclear facilities in Iran, Asian currencies weakened and the dollar gained strength. The U.S. Dollar Index (DXY) rose by approximately 0.3–0.4%, and the yuan depreciated by around 0.1% as investors sought safety in the greenback.

These Middle East tensions underscore the dollar’s role as a safe haven currency, especially when geopolitical instability threatens oil supply, fuels inflation, and slows global growth. China, which relies heavily on energy imports and industrial exports, is vulnerable to a weaker yuan in such scenarios due to logistical disruptions and cost pressures.