Overview
- The onshore yuan traded near 7.06 per dollar this week, its strongest level in more than a year after firmer daily reference rates.
- Reuters reported major state banks bought dollars in the spot market and held them rather than recycling via swaps to curb the speed of gains.
- Back-end dollar/yuan swap points fell, increasing the negative carry for long-yuan positions and discouraging fast-moving bets.
- An estimated PBOC midpoint near 7.0751 on Friday signalled continued managed appreciation within the currency’s permitted trading band.
- The yuan is up about 3.3% against the dollar this year, putting it on track for its largest annual rise since 2020 as offshore traders position for further strength.