China's central bank, the People's Bank of China (PBOC, Financial), has adjusted the yuan's fixing rate to 7.0948 per U.S. dollar, marking its most significant deviation from Reuters' estimates in almost five months. This move is part of the authorities' efforts to stabilize the currency and avoid sharp declines.
The PBOC sets this midpoint rate before the market opens, allowing the yuan to fluctuate within a 2% band. The recent fixing was notably stronger than Reuters' prediction of 7.2259, showing a 1,311 pips difference, the largest since November 2023.
This adjustment comes after the yuan hit a four-month low last Friday. The PBOC has been actively setting stronger-than-expected rates to support the currency. Alex Loo, a macro strategist at TD Securities, anticipates the PBOC will continue to prevent further weakness in the yuan and manage any abrupt fluctuations following the market's response last Friday.
