The People’s Bank of China set Wednesday’s USD/CNY central reference rate at 6.7854, marking a slight strengthening of the yuan from Tuesday’s fix of 6.7905. The move comes in significantly weaker than the Reuters estimate of 6.7421, indicating Beijing’s continued tolerance for a softer currency amid ongoing economic headwinds.
The daily fixing serves as the midpoint for the yuan’s permitted two percent trading band in either direction and signals official policy stance on currency levels. The gap of over 400 pips between the PBOC’s fix and market expectations suggests authorities are resisting appreciation pressure or deliberately allowing controlled depreciation to support export competitiveness.
Currency traders and multinationals with China exposure should watch for potential volatility in Asian trading hours. The weaker fixing could impact regional currencies and commodity prices tied to Chinese demand.
FXnCO Insight
Exporters should consider hedging yuan exposure now while importers may benefit from waiting as the PBOC appears comfortable letting the currency drift weaker near-term.
Source: FXStreet