Offshore Yuan Set for Fourth Monthly Gain

The offshore yuan edged down below 6.96 per dollar, easing from a 32-month-high after the People’s Bank of China continued to set a weaker daily midpoint.

The central bank fixed the yuan at 6.9858 before the market opened, slightly above the prior session and below market expectations.

This continued trend of weaker fixings since November underscores Beijing’s cautious stance against rapid yuan appreciation.

Still, the softer fix does not signal a policy shift, but rather reflects an effort to manage the pace of appreciation and preserve orderly market conditions.

Meanwhile, China’s December industrial profits posted its first monthly gain since September and its first annual rise since 2021 as Beijing’s measures to curb excess competition supported factory earnings.

Markets now await upcoming local PMI figures, with both official and private surveys due this week.

Adding support, the US dollar remained under pressure amid growing concerns over the Federal Reserve's independence.

The offshore yuan steadied around 6.95 per dollar on Monday, holding near thirty-two-month highs, supported by China’s push to deepen financial links with Hong Kong.

The People’s Bank of China plans to reinforce Hong Kong’s role as the main offshore yuan hub, support new yuan-based products, and expand swap facilities.

The policy-driven steps come amid broader efforts to improve liquidity and access for global investors, helping to stabilize the currency and strengthen its international use.

The central bank’s measured pace of appreciation through its daily fixings and foreign-exchange settlements from exporters further added support.

Markets now await upcoming local PMI figures to gauge the health of the world’s second largest economy, with both official and private surveys due this week.

Elsewhere, focus is on trade developments as US President Trump warned that Canada could face tariffs of up to 100% if it finalizes a trade deal with China.

The offshore yuan edged higher to around 6.95 per dollar on Friday, snapping a two-session losing streak as the People’s Bank of China set its daily midpoint fixing stronger than the psychologically important 7-per-dollar level.

The central bank fixed the yuan at 6.9929 per dollar, marking the first time the reference rate has been set below 7 since May 2023.

The move underscores a shift in official tolerance toward a stronger currency, signaling policymakers’ comfort with further yuan appreciation and their willingness to accommodate additional gains amid a weaker greenback.

During the past month, the yuan has surged around 1% against the US dollar, surpassing most regional currencies.

The gains have been supported by the country’s outsized $1.2 trillion trade surplus, stronger capital inflows, and improving sentiment toward Chinese equities.

For the week, the currency is on track for a second consecutive advance, hovering near its strongest level since May 2023.

The offshore yuan held steady around 6.95 per dollar on Thursday, after sliding in the previous session, as markets saw the weaker-than-expected daily fixing as a deliberate effort to maintain a “measured and orderly” pace of currency appreciation.

The People’s Bank of China set the midpoint rate at 7.0019 per dollar, 322 pips weaker than a Reuters estimate.

The latest move, which has been part of a pattern seen since early December, highlighted Beijing’s strategy to prevent a swift dollar unloading, curb sudden fluctuations, and support market stability.

Adding further support to the yuan were continued foreign-exchange settlements from exporters, alongside foreign inflows into Chinese equities amid sustained investor optimism around artificial intelligence.

On the economic front, urban youth unemployment among 16- to 24-year-olds, excluding students, fell to 16.5% in November 2025 from 16.9% in October, marking the lowest level since June.

The offshore yuan weakened to around 6.96 per dollar on Wednesday, snapping a two-session gain as the People’s Bank of China kept the daily fixing weak.

The central bank fixed the reference rate at 7.0014 per dollar, softer than estimates from both Reuters and Bloomberg.

Policymakers remain wary that excessive currency strength could squeeze exporters, tighten domestic financial conditions, or trigger destabilising capital flows.

In response, the weaker-than-expected fixing continued a pattern seen since early December, reflecting Beijing’s determination to manage the pace of yuan appreciation amid capital inflows that buoy sentiment and a declining US dollar.

Investors view this approach as a familiar FX playbook, in which authorities tolerate currency strength consistent with macro fundamentals but lean against momentum-driven trades.

On the monetary policy front, the PBoC kept the one- and five-year loan prime rates at 3% and 3.5%, marking eight months of policy stability.

The offshore yuan steadied to around 6.96 per dollar on Tuesday, trading close to 32-month highs after the central bank left lending rates unchanged, opting for targeted economic support over broad monetary easing.

The People’s Bank of China kept the one-year and five-year loan prime rates at 3.0% and 3.5%, respectively, extending an eight-month streak of policy stability.

The decision highlighted Beijing’s preference for selective stimulus as economic momentum softened, with household spending and the property sector continuing to weigh on domestic demand.

Rather than cutting benchmark rates, authorities have focused on targeted measures to support private firms, small businesses, and technology investment.

Meanwhile, the yuan’s strength against the dollar has eased pressure on policymakers, allowing them to prioritize currency stability.

The greenback came under pressure after threats from the White House towards the European Union over the future of Greenland rattled global markets.