Overview
- Onshore trading saw the yuan near 7.06–7.07 to the dollar after notching a 14‑month high, then easing following a softer-than-expected PBOC fixing.
- Reuters reported that major state-owned banks purchased dollars this week and refrained from recycling them into the swap market, a tactic that lifted the carry cost of long-yuan positions.
- Sources said the goal was to slow the pace of appreciation rather than reverse it, reflecting policymakers’ preference for a controlled climb.
- Authorities have guided the currency with daily midpoint fixings within the PBOC’s +/-2% band, at times setting references that diverge from model-implied levels to smooth moves.
- The yuan is up about 3.3% year to date and could post its biggest annual gain since 2020, as offshore traders position for further strength in spot and options.