The offshore yuan weakened to around 7.05 per dollar, retreating from a more than one-year high in the prior session after the People’s Bank of China set a weaker-than-expected daily fixing. The PBOC set the midpoint at 7.0733 per dollar, 179 pips below the Reuters consensus and marking the largest weak side deviation since November 2022. The move signaled policymakers’ intention to temper the currency’s recent appreciation and reaffirmed the PBOC’s focus on currency stability. Despite the retreat, the yuan is still poised for its best annual showing since 2020, supported by improving US-China relations and a weaker greenback. Meanwhile, investors are closely watching the upcoming Central Economic Work Conference and the December Politburo meeting. China is expected to retain its “around 5%” annual economic expansion target next year, an objective that could prompt Beijing to maintain accommodative fiscal and monetary policies as it works to reverse the current deflationary pressures.