The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%.
The Bank injected CNY 26bn via 7-day reverse repos at an unchanged rate of 1.4%.
Earlier:
The daily fixing of this mid-rate is often interpreted as a policy signal rather than just a technical reference point. A higher-than-expected USD/CNY midpoint is typically read as a sign the PBOC is leaning against CNY appreciation pressure, like today.
—
In trading yesterday the offshore yuan (CNH) strengthened past 7.02 per dollar, to its strongest level since October 2024.
As Wednesday’s USD/CNY trade opened the pair moved to the lowest since September 30 of 2024.
In other FX news:
- Cable has moved to its highest in 3 months through 1.3530
- EUR/USD has moved to its highest in 3 months also, above 1.1805
Yen is also pushing stronger following the data and BoJ earlier:
Yen is having a good week. As I posted earleir:
Remarks from Atsushi Mimura warning about excessive and one-sided currency moves prompted a reassessment of short-yen positions, reinforcing the sense that authorities are increasingly sensitive to renewed volatility. This message was later echoed by Finance Minister Satsuki Katayama, adding further weight to the view that sharp or disorderly moves would not be ignored.
