China Signals Goal of Slow Yuan Gain Via Fix Well Below Estimate

China set the yuan’s daily reference rate at a level that was below market estimates by a record margin, in the latest sign of policymakers’ intention to slow the currency’s appreciation.

The People’s Bank of China set the yuan’s so-called fixing at 7.0358 per dollar, 301 pips weaker than the average estimate of traders and analysts in a Bloomberg survey. The gap between the reference rate — which limits the onshore yuan’s moves by 2% on either side — and the forecast was the largest since the survey was initiated in 2018.

The move came after the offshore yuan advanced past the key psychological level of on Thursday for the first time since September 2024. The PBOC has been using the reference rate to guide the yuan stronger at a pace as it tries to appease Beijing’s trading partners while protecting its exporters. A rapid rally risks triggering a surge of hot-money inflows that may destabilize China’s financial markets.

While the fixing was weaker than the market estimate, it’s still stronger than where it was in the previous session. The offshore yuan was little changed at 7.0042.

The PBOC’s cautious approach has come on the back of a growing chorus among Wall Street Banks including and Bank of America Corp. which expect the Chinese currency to strengthen well beyond 7 in 2026. Even within China, a rising number of local economists and former central bank officials have a stronger currency to help rebalance the economy away from exports and reduce trade tensions.