The People’s Bank of China has set the USD/CNY reference rate at 6.8109 for Friday’s trading session, marking a slight strengthening of the yuan from Thursday’s fix of 6.8150. The move comes in notably weaker than the Reuters estimate of 6.7640, signaling the central bank’s continued tolerance for a softer currency despite recent market expectations for yuan appreciation.
The 41-basis-point difference represents modest yuan strength against the dollar in the daily fix, though the substantial gap between the actual rate and the Reuters estimate indicates the PBOC remains comfortable allowing gradual depreciation. This daily reference rate sets the midpoint around which the yuan is allowed to trade within a two percent band during mainland trading hours.
Currency traders and Asian market participants should monitor whether this trend continues as it impacts carry trade positions and regional currency dynamics. The weaker-than-expected fix could pressure other Asian currencies and influence portfolio flows across emerging markets.
FXnCO Insight
Watch for potential yuan weakness through the session as the PBOC’s tolerance for depreciation may create tactical shorting opportunities in CNY crosses.
Source: FXStreet