AdvertisementYuanEconomyChina EconomyChina’s central bank sets onshore yuan fixing at strongest point in nearly 16 months
Analysts note how Beijing’s policy goals, such as internationalising China’s currency and curbing overcapacity, are aligning with a firmer exchange rate
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China’s central bank strengthened the yuan’s daily fixing for a third consecutive session to a nearly 16-month high, as the currency also held firm in offshore markets despite recent US dollar strength.
On Tuesday, the People’s Bank of China set the yuan’s midpoint rate, also known as the daily fixing rate, at 7.0103 to the US dollar – the strongest showing since the end of September 2024, when the rate was set at 7.0074.
That official midpoint rate, however, was still weaker than that of the offshore yuan, which was trading at around 6.97 to the US dollar as of midday Tuesday – in line with broad market expectations that, while the PBOC may prefer a firmer currency, the central bank remains cautious about rapid appreciation.
AdvertisementThe yuan has strengthened in recent months, breaking through the psychologically important mark of 7.0 per US dollar and has remained resilient despite the American currency’s broad strength following the United States’ military action in Venezuela. A lower figure reflects a stronger yuan, as it takes fewer yuan to equate to a dollar.
Deutsche Bank analysts, led by global head of foreign exchange research George Saravelos, noted on Monday that their conviction for a positive yuan outlook had “only strengthened into the new year”.
AdvertisementThey said that Beijing’s policy objectives – including yuan internationalisation, reducing overcapacity, and boosting consumption-driven growth – were increasingly aligned with accommodating a stronger currency.AdvertisementSelect VoiceChoose your listening speedGet through articles 2x faster1.25×250 WPMSlowAverageFast1.25x
