Key Points
- 01Onshore yuan climbs to about 6.66 per dollar, a four-year high
- 02Currency is set for a fourth straight monthly and fifth weekly gain
- 03PBOC midpoint fixings reach strongest levels since early 2023
- 04Yuan’s CFETS basket index rises to its highest since July 2022
Yuan extends rally to four-year high
China’s onshore yuan strengthened to around 6.659 per dollar in Friday trading, its strongest level since June 6, 2022, as it headed for a fourth consecutive monthly gain. The spot rate opened at 6.6600 per dollar and remained near that level as of 0240 GMT, with the currency also on course for a fifth straight weekly advance.
The latest move builds on sustained appreciation this year, with the yuan up 5.0% against the dollar so far. Robust exports and ongoing conversion of exporters’ dollar holdings into the local currency have supported demand for yuan in the spot market.
Central bank guidance and trading band
Before Friday’s market open, the People’s Bank of China set the yuan’s daily midpoint at 6.7138 per dollar, its strongest level since February 2023. A day earlier, the midpoint was fixed at 6.7147 per dollar, marking the firmest setting since February 2, 2023. These stronger fixings have accompanied the spot market’s push toward multi‑year highs.
Despite the firmer bias, both recent midpoints were set weaker than market-implied levels, indicating an effort to moderate the speed of appreciation while still permitting gains. The yuan is allowed to trade within a 2% band on either side of the official midpoint each trading day, framing the scope for intraday moves.
Onshore and offshore yuan performance
In onshore trading, the yuan has risen 0.2% against the dollar so far this week and 0.7% over the month, extending a pattern of steady strengthening. Offshore yuan has moved closely in line, trading near 6.6601 per dollar on Thursday and around 6.6557 per dollar on Friday in Asian hours, with small day‑to‑day gains.
The currency’s advance has coincided with a slightly softer US dollar, with the dollar index (DXY) around 101.73, and follows a period in which the US Federal Reserve held interest rates unchanged while monitoring inflation dynamics. Market participants are also tracking policy signals from other major central banks that could influence broader dollar trends.
Trade-weighted strength and broader valuation
Beyond the bilateral rate with the dollar, the yuan has also strengthened against a broader basket of trading-partner currencies. Based on Friday’s midpoint, the CFETS trade-weighted yuan index rose to 103.77, its highest level since July 15, 2022.
For the year to date, the yuan has appreciated about 5.9% against this basket, reflecting gains in its overall international value, not only versus the dollar. This trade‑weighted advance accompanies the spot rally and underscores the broad-based nature of the currency’s recent strengthening.
Key Takeaways
- 01The yuan’s rise to a four-year high is part of a measured, multi‑month appreciation rather than a sharp one‑day move.
- 02Central bank midpoint fixings show policymakers are tolerating a stronger currency while still guiding the pace of gains.
- 03The yuan is appreciating not only against the dollar but also on a trade‑weighted basis, indicating broader external strength.