Yuan hits fresh high since 2022 on export growth, stronger guidance

China's yuan reached its highest level in over four years on Tuesday, following guidance from the central bank for a stronger currency. The currency climbed to 6.6789 per dollar in early trading, marking its strongest level since June 28, 2022. The offshore yuan also traded at 6.6787 per dollar, marking a 0.05% increase and reaching a four-year high.

Economic growth in China rebounded from a three-year low, with the economy expanding 4.5% in the latest quarter, surpassing projections. This growth was driven primarily by exports and industrial output, despite a slowdown in domestic consumption. The People's Bank of China left its benchmark lending rates unchanged for the 17th consecutive month in October, in line with expectations.

Analysts from CSCI Pengyuan Credit Rating noted that the most direct support for the renminbi's appreciation in this instance came from the trade sector's robust performance. As the yuan's upward trend persisted, corporations accelerated their foreign-exchange settlements, further bolstering its strengthening momentum. The central bank had anticipated the yuan to continue appreciating moderately throughout 2026 and trade within the 6.60–6.70 range by year-end.

Prior to market opening, the People's Bank of China set the midpoint rate at 6.72 per dollar, the strongest since February 2, 2023, and 387 pips weaker than a Reuters estimate. The central bank's gradual strengthening of daily official yuan guidance has been interpreted as an attempt to control the pace of appreciation. Traders and analysts viewed the direction of the daily People's Bank of China fixing as a more important indicator of policymakers' intentions.

If the strengthening trend continues, both the CNY and CNH could appreciate more uniformly. Analysts at OCBC expressed a constructive outlook on the renminbi, expecting a measured appreciation. Meanwhile, the dollar's six-currency index dipped by 0.127% to 101.84.