Yuan firms despite PBOC's weaker fixing as dollar sags

SHANGHAI: China’s yuan edged higher against the US dollar on Monday, buoyed by broad greenback weakness and a surging Japanese yen days after Tokyo and Washington jointly intervened in currency markets.

The People’s Bank of China, however, continued to temper the yuan’s appreciation through its daily fixing.

The spot yuan opened at 6.7520 per dollar and was last trading at 6.75 as of 0209 GMT, 25 pips firmer than the previous late-session close.

Prior to the market opening, the People’s Bank of China set the midpoint rate at 6.7898 per dollar, 534 pips weaker than a Reuters estimate. The spot yuan is allowed to trade a maximum of 2% either side of the fixed midpoint each day.

The central bank has been setting weaker-than-expected yuan midpoints since November 2025, which analysts and traders interpret as an effort to prevent excessive yuan gains.

The yen leapt on Monday, keeping traders on alert for further intervention from authorities to shore up Japan’s historically weak currency. Market participants said the extended rebound of the yen could add short-term appreciation pressure on the spot yuan.

UBS analysts said the yen’s strength has generated modest positive spillovers, particularly across low-yielding North Asian currencies, with the offshore yuan, Singapore dollar and Taiwan dollar standing to benefit most if the rally extends.

Analysts at CICC expect the yuan to maintain a moderate pace of appreciation in August, citing potential downside pressure on the dollar, robust Chinese exports and a relatively firm midpoint fixing that could continue to support steady dollar settlement demand.

 The PBOC said on Saturday that for the second half of the year it would maintain exchange-rate flexibility, strengthen expectation guidance and keep the yuan basically stable at a reasonable and balanced level.

Separately, China’s manufacturing sector expanded at its slowest pace in four months in July, as output and new orders rose more slowly, while export orders returned to growth after a contraction, a private-sector survey showed on Monday.

Meanwhile, Hong Kong is set to launch offshore Chinese government bond futures on Monday, giving foreign investors a new risk-management tool as Beijing steps up efforts to expand the yuan’s global use through the Asian financial hub.

The offshore yuan traded at 6.7505 per dollar, up about 0.03% in Asian trade.

The dollar index, which measures the greenback against a basket of six currencies, was 0.018% higher at 99.73.