Yuan Climbs to 3½‑Year Peak Amid Strong PBOC Fixing and Yen Rally

The Chinese yuan rose to a fresh 3‑½‑year high against the U.S. dollar on Thursday, buoyed by a notably stronger central‑bank fixing and persistent dollar weakness that was helped by a rebound in the Japanese yen. The People's Bank of China set the daily midpoint at 6.7807 per dollar before markets opened – the strongest level since February 8, 2023 – although it was 640 pips softer than the 6.7167 forecast. Spot trading allowed a 2 % band around the midpoint, and the onshore yuan peaked at 6.7180 per dollar, the best since February 2, 2023, before settling at 6.7183 as of 0328 GMT; the offshore market traded at 6.7177. Analysts note that the yen’s gains have put pressure on the dollar ahead of a key U.S. jobs release. A trader at a Chinese bank said the yuan’s strength mirrored the yen’s rebound and that investors will soon turn to Friday’s non‑farm payroll data for clues on the Federal Reserve’s policy path. Market pricing currently reflects a 61 % probability of a September Fed rate hike, a move that could influence major currencies, including the yuan, which has appreciated more than 4 % against the dollar this year to become one of Asia’s best‑performing currencies. Goldman Sachs economists expect Chinese authorities to pursue a gradual 3‑5 % per year appreciation of the yuan, balancing growth in advanced industries, the push for manufacturing self‑sufficiency, and the internationalisation of the renminbi.