Overview
- Chinese authorities have stepped up direct market management to temper the yuan’s rise, using the People’s Bank of China daily midpoint guidance and state-owned banks buying dollars to limit near-term gains.
- The PBOC signalled its intent most clearly on Aug. 25 with a large 633‑pip gap between its official fix and market estimates, a move that traders read as a deliberate effort to cool appreciation.
- Onshore market activity has fallen sharply, with average daily spot turnover down to about $31.2 billion in August from $42.2 billion in July, reflecting lower participation and quieter exporter dollar sales.
- Policymakers say the goal is to shield exporters and support jobs because weak domestic demand and very low yields make a stronger currency risky for growth, and analysts now see only modest further gains to roughly 6.68 per dollar by year‑end.
- The PBOC’s actions add to international valuation arguments — the IMF has flagged possible yuan undervaluation and German officials have pressed Beijing — and lower liquidity raises the risk of price swings if market sentiment shifts.