Yuan hits strongest level since 2022 on export growth and PBOC guidance

what happened

China's yuan reached its highest level in more than four years on Tuesday. In morning trade it climbed to 6.6789 per dollar, the strongest since June 28, 2022. The offshore yuan traded at 6.6787 per dollar, up about 0.05%, also at a four-year-plus high, according to Reuters.

Corporate currency settlements and robust export growth supported the move. China's economy expanded 4.5% last quarter, beating forecasts and rebounding from a three-year low. The central bank left benchmark lending rates unchanged for the 17th straight month in October, in line with expectations. The People's Bank of China set the midpoint at 6.72 per dollar, its strongest since February 2, 2023, but 387 pips weaker than a Reuters estimate.

why it matters

The central bank has set daily guidance weaker than market expectations for nearly a year, which traders read as an effort to control the pace of appreciation. CSCI Pengyuan expects a moderate rise through 2026, with the yuan trading between 6.60 and 6.70 by year-end. OCBC says the direction of the daily fixing remains the key signal of policymakers' intentions.

market impact

Yuan and Asian FX: stronger yuan on export strength and PBOC guidance; the dollar index fell to 101.84.

tags

instruments