Offshore Yuan Holds Firm at 2023 Peak

The offshore yuan weakened to around 6.72 per dollar on Tuesday, extending losses from the previous session as a softer-than-expected official fixing continued to weigh on the currency. The People’s Bank of China set the yuan’s midpoint at 6.7852 per dollar, 633 pips below the Reuters estimate and marking its largest negative deviation since February 27. The weaker-than-expected fixing extended a trend seen since November 2025, underscoring the central bank’s efforts to temper the yuan’s recent appreciation while maintaining stability in the currency market. Investors remained focused on escalating US-Iran tensions after Washington expanded sanctions on Iran. Attention also turned to the National People’s Congress Standing Committee meeting scheduled for August 25–28, with investors looking for fresh policy guidance after a run of disappointing economic data and recent commitments by authorities to bolster growth.

The offshore yuan strengthened to around 6.72 per dollar on Friday, marking its third straight session of gains and reaching its strongest level since January 2023, as persistent weakness in the US dollar continued to support the currency. The greenback remained under pressure as expectations for further Fed rate hikes eased, while the announcement of expanded bond buybacks boosted demand for longer-dated Treasuries and weighed on the dollar. On the monetary policy front, the central bank kept its benchmark lending rates unchanged at record lows for a fifteenth consecutive month. The one-year loan prime rate (LPR) was held at 3%, while the five-year LPR remained at 3.5%, reflecting policymakers' cautious approach amid lingering domestic and external uncertainties. Attention is now turning to the National People's Congress Standing Committee meeting in Beijing on August 25–28, where investors hope for additional policy guidance following a string of weak economic data releases for July.

The offshore yuan rose to around 6.73 per dollar on Wednesday, rebounding from the previous session as a weaker US dollar and a strong official fixing provided support. The greenback came under pressure after US 30-year Treasury yields climbed to their highest level since 2007 overnight, fueled by concerns over rising government debt, persistent inflation risks, and geopolitical tensions. Further underpinning the yuan, the People's Bank of China set the daily midpoint at 6.7854 per dollar, its strongest fixing since February 8, 2023. However, the fixing remained 433 pips weaker than Reuters' estimate, suggesting Beijing continues to tolerate a measured pace of yuan appreciation. Meanwhile, Premier Li Qiang pledged to accelerate the transition toward new growth drivers, placing greater emphasis on large-scale initiatives such as the "Six Networks" program. Attention is now turning to the National People's Congress Standing Committee meeting on August 25–28 for potential policy signals.