China's yuan climbs to fresh 4-year high ahead of key policy meetings
FXI•The yuan rose to a four-year high against the dollar, with onshore spot reaching 6.6682 per dollar, as softer oil prices and U.S. Treasury yields weighed on the greenback. The People's Bank of China set its midpoint at 6.7162, its strongest since February 2, 2023, but below market expectations.
1. Yuan extends gains
The onshore yuan reached 6.6682 per dollar, its strongest level since June 2022, and was last at 6.6691, up 0.02%. If gains hold through the late-night close, it would mark an eighth consecutive session of gains, the longest streak since May. The offshore yuan was last at 6.6688, up about 0.01%.
2. Central bank sets midpoint
The People's Bank of China set its daily midpoint at 6.7162 per dollar, the strongest since February 2, 2023, but 471 pips weaker than a Reuters estimate of 6.6691. Traders and analysts said the bank has gradually strengthened its official guidance this year while setting it weaker than market expectations, suggesting it is seeking to manage the pace of appreciation.
3. Policy meetings in focus
Investors are watching upcoming meetings of the U.S. Federal Reserve, Bank of Japan and European Central Bank, with rates widely expected to remain unchanged while officials maintain a hawkish tone. Attention will also turn to China's fifth plenum. Goldman Sachs analysts maintained a 12-month yuan target of 6.40 per dollar and said currency appreciation alone would not address China's economic challenges.
