China’s yuan traded near a more than four-year high Monday as the People’s Bank of China (PBOC) set a slightly weaker yuan fixing, leaving firm spot quotes alongside a softer official benchmark.
At 9:49 p.m. ET Sunday (02:49 UTC Monday), the onshore yuan was at 6.6551 per dollar, up 0.01%, and the offshore yuan was at 6.6529, up about 0.01%, The Economic Times reported. Reuters reported Friday that a spot quote of 6.659 per dollar marked the currency’s strongest level since June 6, 2022.
The PBOC-authorized China Foreign Exchange Trade System (CFETS) set Monday’s central parity at 6.7146 yuan per dollar, compared with 6.7138 on Friday. The eight-pip rise in the dollar’s value indicated a weaker yuan reference. The parity guides China’s interbank spot market and is separate from onshore and offshore trading quotes. CFETS says market makers submit prices before trading begins; the calculation reflects the prior interbank close, foreign-exchange supply and demand, and moves in major currencies.
Reuters reported that analysts have interpreted weaker-than-expected fixings as a way to manage the pace of yuan appreciation. The PBOC did not cite that rationale for Monday’s setting. Reuters said exporters’ dollar sales and increased hedging added support for the yuan; a stronger yuan can reduce the value of exporters’ dollar holdings.
The PBOC also began daily overnight reverse-repo operations at a fixed rate of 1.25% on Monday under a new short-term rate framework. Xinhua Finance reported that the central bank conducted 541 billion yuan in overnight operations. After 1 trillion yuan of overnight repos and 56 billion yuan of seven-day repos matured, the day’s operations resulted in a net withdrawal of 515 billion yuan.
Reuters reported that broader currency markets were rangebound as investors awaited the U.S. midterm elections. Eric Robertsen, Standard Chartered’s global head of research and chief strategist, cautioned that the election result could differ from the anti-incumbent mood reflected in polling. The vote, which will determine party control of Congress, is scheduled for Tuesday, Nov. 3.
