China's Yuan Hits Strongest Level Since February as PBOC Sets Firmer Fix

China's onshore yuan has reached its strongest level since February 8th, 2023, as the People's Bank of China set a firmer daily midpoint fix. The PBOC fixed the yuan at 6.7807 per dollar, which is stronger than Thursday's spot price around 6.718 per dollar but still weaker than Reuters' model estimate of 6.7167. This has led investors to interpret the move as an attempt by the PBOC to allow gradual strength in the yuan while avoiding a rapid rise.

The midpoint fix is part of China's managed currency system, where the onshore yuan can trade within a ±2% range of the daily fix. The PBOC has often set the midpoint weaker than market forecasts since November 2025, which investors read as a signal to allow strength in the yuan but not too quickly.

The next test for the yuan will come from Friday's US nonfarm payrolls report, which can shift expectations for Federal Reserve policy and move the dollar. This could have a ripple effect on Asian currencies, including the yuan.