The People’s Bank of China has set Friday’s USD/CNY central reference rate at 6.7904, marking a slight weakening from the previous session’s 6.7895 fix. The rate came in notably weaker than the Reuters estimate of 6.7548, representing a significant gap of over 350 pips between market expectations and the official guidance. This daily reference rate establishes the midpoint around which the yuan is permitted to trade within a two percent band during onshore trading hours.
The wider-than-anticipated spread between the PBOC fix and Reuters consensus suggests Chinese monetary authorities are comfortable allowing gradual yuan depreciation against the dollar. This could reflect Beijing’s efforts to support export competitiveness amid ongoing global economic uncertainty or response to capital flow dynamics. Currency traders and firms with yuan exposure should monitor whether this signals a sustained policy shift toward a weaker currency trajectory.
FXnCO Insight
Traders should watch for potential further yuan weakness if PBOC continues setting fixes substantially below market expectations, which could trigger stops and accelerate USD/CNY upside momentum.
Source: FXStreet