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.
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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”.
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