Yuan eases from 32-month high as dollar rebounds after Fed pause

HONG KONG: China’s yuan eased on Thursday from a 32-month peak against the dollar, as Beijing set the currency fixing weaker after the greenback’s rebound from a four-year low.

The yuan was trading at 6.9476 to the dollar by 0333 GMT, a pip lower than the previous late session close, after being stuck in a tight range in early trade.

 The offshore yuan traded at 6.9442 yuan per dollar, down about 0.01% in Asian trade.

The weakness followed the greenback’s rebound from a four-year low overnight, after the Federal Reserve held interest rates steady and signalled a lengthy wait before further reductions in borrowing costs.

As the dollar index has already fallen near the 96 level and there are no new fundamental negatives, the market will adopt a “wait-and-see” approach for now, analysts at China Merchants Bank said in a note.

 “However, the decline of the dollar is far from over, with US ‘unpredictability’ still hanging over the market,” they added.

“A temporary pause in rate cuts might help with a modest rebound, but it would likely only create an opportunity for markets to go short.”

 The yuan is up 0.7% against the dollar this month, following a rise of 4.5% in 2025, fuelled by positive factors, such as a weaker greenback and increased year-end demand from exporters.

Following the dollar’s strength, the People’s Bank of China set the midpoint rate at 6.9771 per dollar prior to the market open. That helped the fixing to come off from a 32-month peak, to stand 250 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 gradually beefed up its daily yuan official guidance but at levels weaker than market projections, suggesting it is allowing some appreciation and discouraging one-way bets on rapid yuan gains, traders and analysts said.

 “We expect the yuan will continue to demonstrate steady and moderate appreciation, with the USD/CNY exchange rate reaching to 6.7 by year-end,” analysts at China Galaxy Securities said in a note.