In domestic trading, the currency gained up to 0.5% to reach 6.8750 per dollar, its strongest showing since mid-May 2025, reported Bloomberg. The move came after authorities delivered their largest increase to the reference rate in months.
The People’s Bank of China’s (PBOC) decision was taken a day ahead of the country’s most important political fixture of the year, when authorities typically strive to bolster market confidence.
A higher reference rate also points to ongoing official comfort with measured appreciation, after the bank removed a surcharge on bets against the currency.
According to Reuters, the central bank took steps on Friday to slow the yuan’s advance, eliminating the reserve requirement tied to forex forward contracts to ease pressure on exporters and stimulate dollar demand.
The decision followed Thursday’s surge, when the currency reached its highest level against the dollar in almost three years. It edged lower on Friday, pausing a rally propelled by an unforeseen export boom.
The yuan has appreciated by more than 7% against the dollar since April last year. The latest steps by the central bank, including a softer-than-anticipated daily trading band set on Friday, mark its clearest attempt yet to counter the protracted rally, reported Reuters.
As per the Hong Kong-based The Standard, the People’s Bank of China (PBOC) guides the yuan’s movements by allowing it to trade within a 2% band either side of a daily midpoint it sets each morning.
According to a report by Global Times, the PBOC has cut the foreign exchange risk reserve ratio on forward currency sales from 20% to zero, with the change taking effect on Monday.
It is the first time in almost three and a half years that the central bank has deployed the counter-cyclical measure. Analysts said the step should reduce companies’ hedging costs, steady sentiment in the forex market, and help temper the yuan’s recent rapid rise, reported Global Times.
In an interview with CNBC, Julia Wang, North Asia chief investment officer at Nomura, said she expects only measured gains for the yuan in the near term. She argued that exchange-rate flexibility matters more than outright strength if the renminbi is to expand its global role, adding that investors should focus on Beijing’s fiscal blueprint at the upcoming Two Sessions.
