Yuan hits fresh multi-year high as markets await Fed, BOJ decisions
HONG KONG: China’s yuan inched higher to a fresh multi-year peak against the US dollar on Monday after the country’s central bank set a stronger daily guidance, while investors awaited policy decisions from the Federal Reserve and the Bank of Japan. The yuan strengthened to a high of 6.7039 per dollar in early trade, its strongest level since February 2, 2023, before easing to 6.7074. The…
Hong Kong saw China's yuan reach a fresh multi-year high against the US dollar on Monday, as the country's central bank issued a stronger daily guidance, all while investors waited for decisions from the Federal Reserve and the Bank of Japan. The yuan climbed to 6.7039 per dollar in early trading, marking the highest level since February 2, 2023, before settling at 6.7074. Offshore yuan rates were at 6.7074 yuan per dollar, up about 0.03% in Asian markets.
Global currency markets remained relatively calm as traders anticipated potential rate hikes from the Federal Reserve and the Bank of Japan, with this week being a critical period for monetary policy decisions. The dollar's six-currency index edged higher at 99.25. Analysts at CICC believed that Federal Reserve policy developments would likely have a significant impact on the yuan exchange rate.
If the Federal Reserve signaled a dovish stance in the upcoming meeting, the yuan could potentially surpass the 6.70 mark. However, should the outcome be hawkish, the yuan might continue to trade near the current levels.
Before trading commenced, the People's Bank of China set the midpoint rate at 6.7698 per dollar, which was lower than the 6.77 threshold for the first time in over three years. Despite this, the rate was still 615 pips weaker than a Reuters estimate. The spot yuan is permitted to trade within a 2% range of the fixed midpoint rate each day.
Central bank officials have been progressively lowering their official daily yuan guidance, but with a subtle bias towards allowing some depreciation. Analysts at Goldman Sachs noted that while onshore clients expected gradual RMB appreciation, they had low expectations for the extent of this appreciation that the Chinese economy could absorb and that the People's Bank of China (PBOC) would tolerate.
This surge in the yuan's value accounted for approximately 4% of total earnings for Chinese-listed companies in the first half of 2026, marking the highest share in a decade.
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