The offshore yuan weakened to around 7.12 per dollar on Friday, retreating from a more than nine-month high reached in the prior session and snapping a five-day winning streak. Despite the pullback, the yuan remains on track for significant monthly gains, reaching its strongest level since November. This strength is supported by signals from the People’s Bank of China, indicating a shift in currency strategy amid improving trade conditions that have brightened the country’s economic outlook. This week, the PBOC raised its daily reference rate by 0.4%—its largest adjustment since September 2024—and set the fixing at 7.1030 per dollar today, marking the strongest guidance since November. This development marks a departure from the PBOC’s previously cautious stance, in which it prioritized currency stability in response to economic uncertainty and heightened geopolitical tensions, particularly during the earlier stages of the US-China trade conflict.
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