HONG KONG: China’s yuan hit its highest level in more than four years on Tuesday after the central bank guided the currency stronger, while corporate settlement demand amid robust export growth further underpinned its strength.
The yuan rose to as much as 6.6789 per dollar in morning trades, its strongest level since June 28, 2022.
The offshore yuan traded at 6.6787 yuan per dollar, up about 0.05% and also at a more-than-four-year high.
China’s economic growth rebounded from a three-year low, expanding 4.5% last quarter and beating forecasts, as exports and industrial output continued to drive growth despite weak domestic consumption.
In a sign that policymakers are in no rush to roll out further monetary easing following the strong GDP reading, China left its benchmark lending rates unchanged for the 17th straight month in October on Tuesday, in line with market expectations.
“The most direct support for the renminbi’s appreciation this round has come from the trade sector’s strong performance,” analysts at CSCI Pengyuan Credit Rating said in a note.
Corporates had accelerated their foreign-exchange settlements as the yuan’s upward trend persisted, reinforcing its strengthening momentum, they said. The yuan was expected to continue appreciating moderately for the rest of 2026 and trade in the 6.60–6.70 range by year-end, they added.
Before the market opened, the People’s Bank of China set the midpoint rate at 6.72 per dollar, its strongest since February 2, 2023, and 387 pips weaker than a Reuters estimate.
The central bank has gradually strengthened its daily official yuan guidance, but has set it at levels weaker than market expectations for nearly a year. Traders and analysts interpreted the move as an attempt to manage the pace of appreciation.
The spot yuan is allowed to trade 2% on either side of the fixed midpoint each day.
“The direction of the daily PBoC fixing remains a more important gauge of policymakers’ intentions,” analysts at OCBC said in a note. “If the strengthening trend persists, both CNY and CNH could continue appreciating in a more aligned manner.”
“We remain constructive on RMB and expect appreciation to be measured.”
Elsewhere, the dollar’s six-currency index was 0.127% lower at 101.84.