China’s offshore yuan strengthened to around 6.78 per dollar on Friday, extending gains from the previous session to its strongest level in nearly three weeks after the People’s Bank of China signaled greater tolerance for currency appreciation. The central bank set the yuan’s daily reference rate at 6.7989 per dollar, stronger than Thursday’s fixing of 6.8036 and below the closely watched 6.80 threshold for the first time since 2023. A fixing below 6.80 per dollar is widely viewed by investors as an indication that authorities are not seeking to restrain the yuan’s recent appreciation. Attention is now turning to a packed slate of Chinese economic releases due next week, including trade data, second-quarter GDP, industrial production, retail sales, and the unemployment rate. The figures are expected to provide fresh insight into the strength of the economy and could shape expectations for the yuan’s near-term direction.
Offshore Yuan Snaps 3-Day Losing Streak
The offshore yuan rose to around 6.79 per dollar on Thursday, snapping a three-session losing streak, as stronger producer-price growth reinforced expectations that deflationary pressures are easing despite still-muted consumer demand. Annual producer inflation rose to 4.1% in June from 3.9% in May, marking the fastest pace since July 2022, supported by higher commodity and energy costs amid the Middle East tensions. Meanwhile, annual consumer inflation eased to a three-month low of 1% from 1.2% in May. While rising global prices for oil, semiconductors, and industrial metals have lifted factory-gate prices, weak domestic demand has limited cost pass-through to consumers, keeping pressure on profit margins. On the monetary policy front, the central bank reiterated its commitment to maintaining an appropriately accommodative stance and strengthening financial support for domestic consumption, while acknowledging the persistent imbalance between robust supply and relatively weak demand.
Offshore Yuan Extends Fall
The offshore yuan depreciated to around 6.80 per dollar on Tuesday, extending losses from the previous session and hitting a one-week low as investors weighed the latest outlook for China’s economy. The World Bank projected China’s economic growth to slow to 4.4% in 2026 and 4.3% in 2027, citing a prolonged property market downturn and subdued consumer spending. Meanwhile, the government also set its 2026 GDP growth target at 4.5%–5.0%, the lowest since 1991 and the first downward revision since 2023, after maintaining a target of around 5% over the previous three years. Separately, the PBoC announced measures to strengthen Hong Kong’s role as an offshore yuan hub. These include more than doubling the RMB Business Facility to 500 billion yuan, raising the annual Southbound Bond Connect quota to 800 billion yuan from 500 billion yuan, and pledging support for more yuan-denominated commodity products following the launch of a new gold clearing system in Hong Kong backed by major banks.
Offshore Yuan Falls on China Growth Concerns
The offshore yuan weakened to around 6.79 per dollar on Monday, reversing gains from the previous session as renewed concerns over China’s economic outlook weighed on sentiment. A private survey showed that the Manufacturing PMI eased to a three-month low of 51.7 from 51.8 in May. The reading followed stronger-than-expected official data showing the Manufacturing PMI rising to 50.3 in June from 50.0 in May, above forecasts of 50.1. Sentiment was also weighed down by an assessment from Goldman Sachs, which noted a more cautious tone among local clients regarding China’s near-term growth outlook, alongside concerns over weak consumer confidence, persistent labor market pressures, and the prolonged property downturn. The yuan’s weakness came even as the PBOC set the daily midpoint at 6.8067 per dollar, its strongest fixing in more than three years. Meanwhile, the EU’s trade chief and China’s commerce minister began talks in Brussels aimed at easing trade tensions.
Offshore Yuan Heads for Monthly Loss
The offshore yuan weakened to around 6.79 per dollar in June, reversing two consecutive months of gains as a stronger US dollar and a series of softer-than-expected daily fixings from the People’s Bank of China weighed on the currency. The dollar strengthened as investors priced in higher-for-longer US interest rates, while ongoing uncertainty in the Middle East boosted demand for the currency’s safe-haven appeal. Additional pressure came from the PBoC’s persistent setting of weaker-than-anticipated reference rates, reinforcing expectations that authorities are comfortable with a gradual depreciation of the yuan. On the economic front, manufacturing PMI edged up to 50.3 from 50.0, exceeding market expectations of 50.1, supported by resilient demand for high-tech exports that helped offset trade disruptions linked to tensions in the Middle East. Meanwhile, the non-manufacturing PMI edged up to 50.2 from 50.1, beating forecasts of 49.9 and signaling continued stabilization in the sector.
Offshore Yuan Heads for 2nd Weekly Loss
The offshore yuan weakened to around 6.80 per dollar on Friday and was on track for a second consecutive weekly loss, remaining under pressure from a broadly strong US dollar. The greenback continued its momentum after the Federal Reserve recently adopted a more hawkish stance, leading markets to price in a 75% probability of a rate hike as early as September. Meanwhile, the People’s Bank of China unveiled plans to introduce overnight reverse repo operations on June 29–30 as part of the next phase of its monetary policy framework reform. This will complement the existing seven-day reverse repo rate, bringing the PBOC’s policy toolkit more closely in line with those of major central banks, including the Federal Reserve. On the economic front, fiscal expenditure rose 0.8% year-on-year to CNY 11.39 trillion ($1.59 trillion) in the first five months of 2026. Central government spending increased 6.5% to CNY 1.68 trillion, while local government expenditure fell 0.1% to CNY 9.71 trillion.
Offshore Yuan Holds Near 1-Month Low
The offshore yuan steadied around 6.81 per dollar on Thursday, hovering near a one-month low after the People’s Bank of China unveiled plans to introduce overnight reverse repo operations as part of its next phase of monetary policy reform. The central bank said it will conduct overnight reverse repurchase operations on June 29–30, providing fixed-rate overnight liquidity to better address short-term funding needs in the banking system. The new overnight reverse repo rate will complement the existing seven-day rate of 1.4%, bringing the PBOC’s policy toolkit closer in line with major global central banks such as the Federal Reserve. During the Lujiazui Forum, Governor Pan Gongsheng outlined the central bank’s plans to broaden overnight reverse repo operations. Externally, the yuan remained under pressure from a stronger US dollar amid growing market expectations of further Federal Reserve interest rate hikes later this year.
Offshore Yuan Hits 1-Month Low
The offshore yuan depreciated to around 6.80 per dollar on Wednesday, hitting its lowest level in a month, as a stronger US dollar continued to weigh on the currency. The greenback remained supported by mounting expectations that the Federal Reserve could raise interest rates in September, with markets now assigning roughly a 70% chance of a rate hike. Further pressure came from the People’s Bank of China, which continued to set the yuan’s daily reference rate at weaker-than-expected levels. The central bank fixed the currency at 6.8195 per dollar on Wednesday, extending its longest streak of weaker fixings since April 2025. Meanwhile, China has effectively halted certain tungsten exports to Japan, while rare-earth magnet shipments fell to a one-year low in May, when Beijing first rolled out its global export-control regime. Such restrictions have remained in place amid tensions over Taiwan-related remarks by Japanese Prime Minister Sanae Takaichi.
