Chinese yuan slips from 3-1/2-year high after PBOC signals unease over rapid gains
SHANGHAI: China’s yuan eased from a 3-1/2-year high against the dollar on Tuesday after the central bank set the official midpoint fixing at its widest weak-side deviation from market estimates in six months, signalling unease about the pace of the currency’s recent appreciation. The yuan has emerged as one of Asia’s top-performing currencies this year, rising about 4% against the dollar. Yet a…
Beijing, China - China's currency, the yuan, slipped from a three-and-a-half-year peak against the dollar on Tuesday after the central bank published its official midpoint fixing at its most extreme weak-side deviation from market predictions in six months, indicating apprehension over the speed of the currency's recent surge. The yuan has been among Asia's strongest currencies this year, gaining roughly 4% against the dollar.
However, a rapid rise could weaken China's export competitiveness at a time when the larger economy is showing signs of resurgence.
Ahead of market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.7852 per dollar, 633 pips lower than a Reuters estimate of 6.7219, the largest weaker-side deviation since February 27. The spot yuan is permitted to trade within a 2% range above or below the fixed midpoint each day. Maybank analysts commented on the slight adjustment in the fixes over the past two days, suggesting additional resistance to yuan appreciation as the gap between the fix and estimate widens even as the US dollar shows signs of rebound.
The central bank has been releasing weaker-than-anticipated yuan midpoints since November 2025, which analysts and traders decipher as an attempt to maintain currency market stability and prevent excessive gains. "Recurring large weak-side deviations have emerged several times since July, but the overall pattern in the daily fixing has remained consistently robust, suggesting the central bank's aim was to curb the pace of yuan gains rather than reverse the currency's upward trajectory," stated a trader at a Chinese bank.
Market focus in the spot market remained primarily on developments in US-Iran tensions following Washington's reinforced sanctions on Iran, as well as insights from the Jackson Hole symposium for clues on the Federal Reserve's policy outlook. Fed Chairman Kevin Warsh's inaugural speech at the annual Jackson Hole conference, which aimed at discussing near-term policy or broader principles, has gained extra significance as traders and analysts await guidance on recent bond yield increases and reassurance of his independence from the Trump administration.
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