Yuan hits fresh multi-year high as markets await Fed, BOJ decisions

HONG KONG: China’s yuan inched higher to a fresh multi-year peak against the US dollar on Monday after the country’s central bank set a stronger daily guidance, while investors awaited policy decisions from the Federal Reserve and the Bank of Japan.

 The yuan strengthened to a high of 6.7039 per dollar in early trade, its strongest level since February 2, 2023, before easing to 6.7074.

 The offshore yuan traded at 6.7074 yuan per dollar, up about 0.03% in Asian trading.

 Global currency markets were largely muted as investors braced for possible rate hikes from the Fed and BOJ in a pivotal week for monetary policy.

 Traders also weighed fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf. The dollar’s six-currency index was a touch higher at 99.25.

 “We believe Federal Reserve policy developments could have a significant impact on the yuan exchange rate,” analysts at CICC wrote in a note.

 “Overall, if the FOMC meeting outcome is dovish, the yuan could strengthen past 6.70; otherwise, it may continue to hover around current levels in the near term.”

 Before the market opened, the People’s Bank of China set the midpoint rate at 6.7698 per dollar, below the 6.77 threshold for the first time in more than three years, though it was still 615 pips weaker than a Reuters estimate.

 The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

The central bank has been gradually lowering its official daily yuan guidance, but with a bias suggesting it is allowing some depreciation, traders and analysts said.

 “Onshore clients shared our view that the RMB will appreciate gradually, but had low expectations for the extent of appreciation that the Chinese economy can absorb and the PBOC will tolerate,” analysts at Goldman Sachs said in a note.

FX losses accounted for around 4% of total earnings for Chinese-listed companies in the first half of 2026, the highest share in a decade, they added.