China has delivered its strongest signal in nearly three years that it wants to moderate the yuan’s appreciation, setting Wednesday’s daily reference rate sharply weaker than market expectations.
We gave a heads up earlier:
The People’s Bank of China fixed the yuan at 7.0733 per dollar, around 170 pips below modelled estimates of 7.0554, marking the widest gap since February 2022 and indicating efforts to restrain currency gains as sentiment toward China improves.
The yuan has been grinding toward the psychologically important 7-per-dollar level, supported by easing US–China tensions after a call between Presidents Trump and Xi and the prospect of a Trump visit to China next year. Improved risk appetite, fresh inflows into Chinese equities and broad dollar softness linked to US fiscal concerns have all strengthened the renminbi.
With the currency heading for its best annual performance since 2020, the latest fixing suggests Beijing wants to slow the pace of appreciation to maintain export competitiveness and manage domestic liquidity conditions.
This article was written by Eamonn Sheridan at investinglive.com.