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Sylvia Ma

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.

For much of the past few weeks, global markets have been closely watching how US Treasury Secretary Scott Bessent has been navigating a bond rout that pushed long-term US Treasury yields to multi-year highs.
After a rare joint US-Japan intervention in late July amid the yen’s slide – a move many analysts saw as partly aimed at limiting selling pressure on US Treasuries – the US Treasury last week followed up with plans to at least double the size of some long-end bond buy-backs.
Gavekal’s He said that after a sharp single-day drop in the US dollar index following the buy-back announcement, the PBOC strengthened the yuan’s daily fixing by just 46 pips, far less than the 219-pip strengthening after a similarly sized decline in the US dollar index following former Federal Reserve chair Jerome Powell’s dovish speech in August 2024.
“The central bank’s tolerance for a stronger currency thus appears to be fading,” He said.
He added that if the US dollar weakened further, the PBOC would probably tolerate only a gradual appreciation of the yuan against the dollar, while keeping the pace slower than the appreciation of other currencies, so that the effective exchange rate weakens.
But some analysts said the cautious approach did not signal a shift away from Beijing’s broader preference for a stable currency with room for gradual appreciation.
Cliff Zhao, chief economist at CCB International in Hong Kong, said central bank caution on daily fixing was not a rejection of reasonable yuan appreciation, but an effort to prevent sentiment from overheating and to keep the exchange rate broadly stable.
Xu Tianchen, senior economist at the Economist Intelligence Unit, shared a similar view, saying the approach was a way for the PBOC to manage short-term volatility.
“The central bank does not oppose yuan appreciation, as a stronger currency can make yuan-denominated assets more attractive and support the internationalisation of the yuan. But it is usually wary of rapid appreciation,” he said.
Xu added that modest yuan appreciation was the most likely scenario for the rest of the year, as concerns over the fiscal sustainability of developed economies weighed on their currencies, while the recent stronger macro policy support underpinned the yuan.


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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


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.


China keeps yuan in check as PBOC resists sharp rise against weaker US dollar: analysts

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}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

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