Yuan firms as dollar slips, PBOC rejects undervaluation claims amid EU talks
SHANGHAI: The yuan firmed against the US dollar on Friday as the greenback retreated from an 18-month high, even as China's central bank rejected claims the currency is undervalued amid trade talks between Beijing and the European Union.
Shanghai saw the Chinese currency, the yuan, strengthen against the US dollar on Friday as the greenback fell from an 18-month peak. Simultaneously, China's central bank dismissed allegations that the yuan is undervalued, despite ongoing trade discussions between Beijing and the European Union. The People's Bank of China rebuffed foreign criticism of its exchange-rate policy, asserting that it has never engaged in competitive devaluation.
This stance came as European Union trade officials embarked on a two-day meeting with their Chinese counterparts in Beijing, following three months of talks over the EU's daily goods trade deficit of over €1 billion (US$1.12 billion) and Beijing's restrictions on exports of rare earths and other vital minerals.
According to analysts at Commerzbank, the PBOC's statement indicates China's strategy to frame the narrative before formal calls for exchange rate adjustments can be implemented. By presenting its arguments before a busy global policy schedule, Beijing aims to divert attention from currency undervaluation to the underlying causes of global imbalances, as stated by Tommy Xie, head of Greater China Research at OCBC.
The yuan opened at 6.7000 per dollar and was trading at 6.6987 as of 0221 GMT, 46 pips higher than the prior late session's close. Despite the dollar's strength, the yuan has risen by 4.4% this year and nearly 9% since late 2024, driven by robust exports and policies aimed at attracting foreign investment. The bank expects continued stability for the renminbi (RMB) with a gradual appreciation bias, allowing measured yuan strength when supported by market fundamentals but opposing excessive volatility.
Earlier, the PBOC set the midpoint rate at 6.7330 per dollar, its strongest level since February 2, 2023, and 357 pips weaker than a Reuters estimate. The yuan is allowed to trade within a 2% range of the fixed midpoint daily. The dollar slipped on Friday as euro zone bond yields rose, while expectations for the Federal Reserve's interest rate path in 2025 remained largely unchanged.
The dollar index, which gauges the greenback against six other currencies, fell 0.088% to 102.03. The offshore yuan was trading at 6.6986 per dollar, up around 0.07% in Asian markets.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
