PBOC Sets Yuan Fixing at 7.1161, Strongest Since Nov 2024

The People’s Bank of China set the daily yuan reference rate at 7.1161 per dollar on 25 Aug, roughly 0.5 percent stronger than Friday’s official close of 7.1666 and about 390 pips firmer than the 7.1551 level forecast in a Reuters poll. The fixing marks the strongest midpoint since 6 Nov 2024 and represents the sharpest single-day strengthening since January. Monday’s decisive move extends a pattern seen late last week, when the central bank set the midpoint at 7.1287 on 21 Aug and 7.1321 on 22 Aug—each time well below market expectations. By repeatedly delivering stronger-than-anticipated fixings, authorities are signaling an intent to curb depreciation pressure on the currency amid persistent capital outflows and a widening policy gap with the U.S. Federal Reserve. A firmer reference rate limits the scope for onshore trading to weaken the yuan and reduces the need for state banks to supply dollars in the spot market. Regional currencies also benefited from the shift in tone: the Taiwan dollar posted its biggest advance since 7 Aug after the Fed hinted at a pause in further rate increases.