Yuan bounces off one-month low on firmer guidance, Beijing reveals 2026 targets
- The spot yuan is allowed to trade 2% either side of the fixed midpoint each day
SHANGHAI: China’s yuan rebounded from a one-month low on Thursday, after the central bank set its guidance at the strongest in nearly three years, a move seen as aimed at stabilising the market amid Middle East tensions and a key domestic meeting.
The annual meeting of China’s parliament opened on Thursday.
Beijing set its economic growth target for 2026 at 4.5%-5%, a slight downgrade from the 5% pace achieved last year, which leaves room for greater, albeit not decisive, efforts to curb industrial overcapacity and rebalance the economy.
Prior to market opening, the People’s Bank of China (PBOC) set its midpoint rate at 6.9007 a dollar, 117 pips or 0.07% stronger than its previous setting.
The central bank has been mostly setting a weaker-than-expected guidance rate since late November, Thursday’s fixing, however, was 3 pips firmer than a Reuters’ estimate of 6.9010.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
The strengthened fixing lifted the spot rates. The onshore yuan traded 0.12% higher at 6.8865 per dollar as of 0205 GMT, with its offshore counterpart at 6.8882.
“It appears policymakers intend to maintain a broadly supportive policy stance consistent with the approach taken since 2025,” said Marco Sun, chief financial market analyst at MUFG (China).
In global markets, investors were quick to take comfort in a report that Iran intelligence operatives signaled openness to talks with the CIA to end the war despite Tehran’s subsequent denial, underscoring the fraught sentiment towards a conflict that has lashed global markets.
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