The Chinese yuan’s recent appreciation trajectory is losing momentum as authorities signal a shift toward stability over continued strengthening, according to OCBC currency strategist Christopher Wong. The offshore yuan CNH and onshore CNY fixing spreads have compressed significantly while daily reference rate adjustments from the People’s Bank of China have moderated in recent sessions, indicating Beijing is pulling back from guiding the currency higher.
This policy pivot suggests Chinese authorities are now prioritizing exchange rate stability rather than allowing further appreciation against the dollar. The reduced fixing guidance leaves the yuan’s path less anchored and potentially more vulnerable to market forces, particularly amid ongoing trade tensions and uneven economic recovery signals from China. Traders holding yuan-denominated positions should anticipate increased two-way volatility as the PBOC’s directional bias fades.
FXnCO Insight
Reduce directional yuan bets and prepare for wider trading ranges as Beijing’s weakening appreciation guidance removes a key anchor for CNH and CNY positioning in the near term.
Source: FXStreet