The offshore yuan hovered around 6.98 per dollar, trading near a thirty-two-month high, as seasonal demand persisted while the central bank maintained a measured guidance. Year-end foreign exchange settlements remained robust, as exporters continued to convert overseas receipts to meet domestic payment needs, including bonuses ahead of the Lunar New Year in mid-February, China’s biggest annual holiday. Meanwhile, since May, the PBOC has guided a steady yuan appreciation, raising the midpoint more cautiously than markets expected. This aims to maintain stability, prevent disorderly dollar sales, and avoid sharp swings. Authorities seek to curb “overshooting,” but the currency is expected to keep rising, supported by a recovering economy and foreign capital inflows. President Xi Jinping stated that the economy is on track to achieve its 2025 GDP growth of 5%. Reports also showed that the country’s current account developments suggest there’s more room for the yuan’s strengthening trend.
