The offshore yuan edged higher to around 6.95 per dollar, snapping a two-session losing streak as the central bank set its daily midpoint fixing stronger than the psychologically important 7-per-dollar level. The PBoC fixed the yuan at 6.9929 per dollar, marking the first time the reference rate has been set below 7 since May 2023. The move underscores a shift in official tolerance toward a stronger currency, signaling policymakers’ comfort with further yuan appreciation and their willingness to accommodate additional gains amid a weaker greenback. Recent gains have also been supported by the country’s outsized $1.2 trillion trade surplus, stronger capital inflows, and improving sentiment toward Chinese equities. However, they were partially offset by the central bank’s pledge to maintain a moderately loose policy in 2026, including RRR and interest rate reductions. For the week, the yuan is on track for a second consecutive advance, hovering near its strongest level since May 2023.
