SHANGHAI: China’s yuan held steady against the US dollar on Thursday, underpinned by the strongest official guidance in 10 months and buoyant sentiment in China’s equity markets.
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1063 per dollar, its strongest since November 2024 and 416 pips firmer than a Reuters’ estimate.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
“The yuan’s short-term movements are being shaped by equity-forex linkages, the official midpoint, and capital flows,” said analysts at CIB Research in a note.
“A decisive break to the stronger side of the 7.15 per dollar level could open room for further appreciation, driven primarily by gains in domestic equities.”
The spot yuan opened at 7.1465 per dollar and was last trading 6 pips firmer than the previous late session close and 0.61% weaker than the midpoint.
But the CIB analysts cautioned against potential risks including a correction in onshore shares, a reversal in global risk appetite, and a sharp rebound in the US dollar index.
The offshore yuan traded at 7.1481 yuan per dollar, up about 0.08% in Asian trade to its strongest level in one-month.
Chinese stocks rebounded on Thursday, extending the recent bull run fuelled by abundant liquidity.
They rose to the highest since August 2015 earlier this week.
The firm fixing comes as most Asian currencies, excluding the yuan, have weakened since the start of the second half of 2025, Maybank analysts said in a note, adding that the yuan’s relative stability has emerged as a regional anchor, aligning with Beijing’s broader narrative of positioning China as a dependable partner for trade and investment.
The dollar started Thursday on the back foot as traders added to bets for a Federal Reserve interest rate reduction next month after New York Fed chief John Williams signalled a cut was possible.
The yuan is up 0.7% against the dollar this month, and 2.1% firmer this year.
The dollar index, which measures the dollar against six other currencies, was 0.056% lower at 98.07.
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