China Keeps Fix Weaker Than 7 Despite Dollar Decline, Yuan Rally

China set its daily reference rate for the yuan weaker than 7 per dollar, a sign the central bank is keen to slow the currency’s gains in the face of recent weakness in the greenback.

The People’s Bank of China set the so-called fixing at 7.0014 against the dollar on Wednesday, weaker than all nine estimates in a Bloomberg survey of analysts and traders. The reference rate is now close to the deepest discount to the onshore yuan since 2023, which may suggest that policymakers want to limit the currency’s strength despite the prevailing bullish sentiment in markets.

The PBOC has allowed the yuan to strengthen gradually to reflect the dollar’s weakness and the optimism spurred by capital inflows, but it also wants to ensure the gains won’t pressure local exporters and trigger a rapid repatriation of funds. As a result, it has set the fixing at a weaker-than-expected level every day since early December.

“The signal, if there was an intentional one, is that the authorities want to prevent a large appreciation move as we enter a seasonally strong period for the yuan,” said Khoon Goh , head of Asia research at Australia & New Zealand Banking Group. “However, this is about managing the pace of appreciation, rather than trying to halt it.”

The onshore yuan dropped 0.1% to 6.9646 and was little changed offshore. The fixing on Wednesday was forecast to be 6.9601, according to the Bloomberg survey.

The survey typically reflects market estimates of where the PBOC’s fixing should be given overnight moves, based on its methodology, but excluding the so-called counter-cyclical factor. As a result, any divergence from the actual fixing can be interpreted as the extent of the PBOC’s daily support for or restraint on the managed currency.