China keeps yuan in check as PBOC resists sharp rise against weaker US dollar: analysts
Compared with a more than 2 per cent decline in the US dollar index since late July, the yuan gained less than 1 per cent against the dollar
As the US dollar weakened amid recent US Treasury market interventions, analysts noted that the Chinese yuan had strengthened by a smaller margin, highlighting Beijing’s caution over allowing a sharp appreciation in the currency.
Compared with a more than 2 per cent decline in the US dollar index since late July amid two US Treasury interventions – a joint US-Japan currency intervention to support the yen and the Treasury’s move to expand long-term bond buy-backs – the yuan has gained less than 1 per cent against the dollar, according to a note issued by Gavekal Dragonomics on Wednesday.
“The response of the People’s Bank of China (PBOC) to these unusual interventions from the US has been telling,” He Wei, a China economist at the Beijing-based research firm, said in the note.
Rather than seizing the opportunity to push the currency higher, He said the PBOC resisted market pressure for appreciation, with the Chinese currency even “achieving some depreciation in trade-weighted terms”.
“That reaction confirms the PBOC’s turn to a more cautious stance on the currency in 2026, and suggests the renminbi will probably not move a lot more in coming months.”
On Thursday, the PBOC set the yuan’s midpoint, or the daily fixing rate, at 6.7840 per US dollar, slightly weaker than 6.7829 a day earlier.
The level was also weaker than the offshore yuan, which traded at 6.721 per US dollar at midday on Thursday.