China's central bank, the People's Bank of China (PBOC), has indicated that the yuan is currently overvalued against the U.S. dollar and has advised state-owned banks to reduce their purchases of USD. Despite ongoing tariff pressures from the United States, sources familiar with the situation report that the PBOC is committed to preventing sharp declines in the yuan's value. Additionally, the central bank is not expected to devalue the yuan as a response to the tariffs, as such a move could lead to significant capital flight and threaten financial stability. Economists have noted that a drastic depreciation of the yuan could destabilize markets, especially given the 145% tariff increase imposed by the U.S. on Chinese goods. This stance reflects a broader strategy by Beijing to navigate the trade tensions without resorting to aggressive currency devaluation, which could exacerbate economic challenges.