China’s yuan inches higher as policymakers show little urgency for additional stimulus

SHANGHAI: China’s yuan edged higher against the dollar on Tuesday, as policymakers showed little urgency to roll out additional stimulus measures, while robust exports remained a key driver of economic growth.

 China will keep expanding domestic demand and support the broader economy with more proactive policies in 2026, the Politburo, a top decision-making body of the ruling Communist Party, was cited as saying on Monday by state media Xinhua.

The Politburo meeting “confirms that policymakers are happy with the current situation and feel no urgency to step up stimulus,” said Larry Hu, chief China economist at Macquarie.

“For 2026, they will adopt the same strategy, which means the size of domestic stimulus will depend on the strength of exports.”

China’s trade surplus topped $1 trillion for the first time as manufacturers seeking to avoid President Donald Trump’s tariffs on Chinese goods shipped more to non-US markets in November, with exports to Europe, Australia and Southeast Asia surging.

 As of 0307 GMT, the onshore yuan was 0.04% higher at 7.0704 per dollar. Its offshore counterpart traded at 7.0691, also up about 0.04% in Asian trade.

The yuan’s gains were somewhat capped by the central bank’s cautious daily midpoint guidance, currency traders said.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at 7.0773 per dollar, 25 pips weaker than a Reuters estimate of 7.0748. The spot yuan is allowed to trade a maximum of 2% either side of the fixed midpoint each day.

Tuesday’s midpoint marked the eighth session in nine trading days that the PBOC set a weaker-than-expected fixing, a move traders interpreted as signalling rising unease over the yuan’s recent rapid appreciation.

Meanwhile, major state-owned banks continued to purchase dollars in the onshore spot market on Tuesday, people with knowledge of the matter said. Market participants interpreted the action as aimed at slowing the yuan’s gains.

The yuan has strengthened by about 3.2% year-to-date against the dollar, and looks set for its biggest annual rise since 2020.

Looking ahead, traders will focus on the inflation and credit-lending data due later this week for more clues on the health of the economy.