China's Yuan Hits 3-1/2-Year High as Dollar Weakness Fuels Rally
China's yuan has reached a fresh 3-1/2-year high against the US dollar, but the country's central bank is signaling it doesn't want the exchange rate to surge further. The onshore yuan trading strengthened to around 6.7165 per dollar, with the offshore version near the same level, as the dollar generally weakened.
The People's Bank of China (PBOC) set the midpoint at 6.7787 per dollar, but it was significantly weaker than Reuters' model-based estimate. This move is seen as a way for the PBOC to lean against rapid appreciation without directly intervening in the market.
Analysts at Nanhua Futures believe corporate appetite to convert US dollars into yuan has cooled slightly, which could slow further gains. However, they still expect support from China's export performance and trade surplus, predicting a core trading range of roughly 6.69-6.77 in September.