People’s Bank Fixes Yuan at 6.7162 per Dollar, Strongest Since February 2023
Key Facts
The People’s Bank of China set the yuan midpoint at 6.7162 per dollar on October 26, the strongest fixing since February 2, 2023, Reuters reported. The fixing was 471 pips weaker than Reuters’ estimate of 6.6691, the largest bias to the weaker side since September 23. A higher number of yuan per dollar means the midpoint signals a weaker fixing for the Chinese currency. By contrast, the onshore spot yuan continued to climb to strong levels during the session. The divergence between the fixing and the traded rate stood out as markets awaited major monetary meetings.
The onshore yuan reached 6.6682 per dollar during the session, its strongest level since June 2022, before trading at 6.6691 at 02:52 GMT, Reuters reported. The offshore yuan stood at 6.6688 per dollar, up about 0.01% in Asian trading. The currency has risen 4.87% onshore and 4.63% offshore since the start of the year, based on market levels cited in the agency’s report at 02:52 GMT. EL7 data show the dollar-offshore yuan pair closing at 6.67206 on October 22, 6.66899 on October 25 and 6.66741 on October 26. These moves put the market’s gains in the context of the dollar’s continued decline against the Chinese currency.
The trading system allows the spot yuan to move within a maximum daily range of 2% on either side of the midpoint, Reuters reported. Barclays analysts said the central bank is resisting a faster appreciation of the currency by setting fixings weaker than market expectations. This points to the authorities managing the pace of the rise as the yuan trades at strong levels in the spot market. Reuters also attributed the currency’s gains to pressure on the dollar from weaker oil prices and U.S. Treasury yields. The move came ahead of major monetary meetings, as markets tracked the Chinese currency’s path against the dollar.
On October 8, the People’s Bank set out a broader position on exchange-rate policy, saying China did not need, and did not intend to seek, a trade-competitive advantage through currency devaluation. The yuan has risen about 23% against the dollar since the exchange-rate reform in 2005, from 8.27 yuan per dollar to about 6.7, the bank added, according to Reuters. It said the currency’s path was uncertain, with forces pushing it higher and others lower. The bank said it does not set a target exchange-rate level in advance or intervene in its long-term direction, while preserving the currency’s flexibility and two-way movement. The position comes amid European calls for a stronger yuan, while China’s trade surplus in 2025 reached nearly $1.2 trillion, or about 6% of gross domestic product, Reuters reported.
China’s industrial activity readings provide further context for tracking demand. The manufacturing purchasing managers’ index stood at 50.1% in September, up 0.3 percentage points from the previous month and back in expansion territory, according to the National Bureau of Statistics of China. The production index registered 51.7%, up 1.3 percentage points, while the new orders index came in at 50.5%, down 0.1 percentage points. The index components show production rising while new orders edged lower during the month. The bureau is scheduled to publish its October PMI report on October 31 at 9:30 a.m. Beijing time.
Goldman Sachs maintained its 12-month yuan target of 6.40 per dollar and said consensus forecasts and forward markets may underestimate the potential for appreciation, Reuters reported. That coincides with the yuan’s continued strength in the spot market despite a fixing weaker than the agency’s estimate. The fifth plenary session of the Chinese Communist Party’s 20th Central Committee also opened in Beijing on the morning of October 26, according to the Chinese government. Xi Jinping delivered a work report and explained a draft decision on party governance. Markets are watching upcoming Chinese industrial data and the outcomes of major political and monetary meetings as they assess the currency’s path.