China yuan snaps losses on stronger central bank fix
Prior to its two-day slide, the yuan had been strengthening steadily for months against a broadly weaker greenback
03 March, 2026
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China’s yuan rebounded versus the U.S. dollar on Tuesday, snapping two days of steep declines, after the central bank lifted its official guidance by the most in more than six months.
Investors interpreted the move as an attempt to calm the market amid the volatility induced by the war in the Middle East.
Prior to market open, the People’s Bank of China (PBOC) set its midpoint rate at 6.9088 a dollar, 148 pips or 0.21 per cent firmer than its previous setting.
That marked the biggest one-day strengthening of the yuan fix in percentage terms since August 25.
The central bank allows spot yuan to trade within a 2 per cent band either side of the midpoint each day.
Both onshore and offshore yuan bounced following the guidance. Onshore yuan last fetched 6.8845 a dollar as of 0330 GMT, 0.3 per cent firmer than the previous late night close. Its offshore counterpart gained nearly 0.3 per cent to 6.8838.
The midpoint – which was set at a fresh 34-month high on Tuesday – is acting as a policy tool guiding market expectations, said chief financial market analyst Marco Sun at MUFG (China).
“The yuan has already depreciated following the recent adjustment of the FX forward reserve requirement to zero, along with ongoing geopolitical conflicts, so the fixing will remain steady to anchor market expectations,” Sun said.
Prior to its two-day slide, the yuan had been strengthening steadily for months against a broadly weaker greenback, reaching the highest since April 2023 at 6.831 per dollar on Wednesday of last week.
That spurred the central bank to scrap risk reserve requirements for some forward currency contracts, a move that would encourage dollar buying as exporters feel the pinch from a stronger currency.
While markedly stronger, the central bank’s midpoint on Tuesday was 272 pips weaker than a Reuters’ estimate of 6.8816.
“In our view, the PBOC remains cautious of overly rapid yuan appreciation,” Citi analysts said in a note.
“We maintain our view that some yuan appreciation supports external rebalancing but works against domestic rebalancing.”
Even amid the escalating conflict in the Middle East, domestic investor attention is shifting to the annual meeting of China’s parliament from Thursday, where major economic targets and the year’s policy agenda will be mapped out.
“Overall, we do not expect the recent gains in yuan versus dollar to alter the path of monetary policy,” said Ting Lu, chief China economist at Nomura.
“We continue to expect one 10-basis-point policy rate cut and a 50bp reserve requirement ratio (RRR) cut in Q2 2026, and we do not expect any further cuts to either the policy rate or the RRR thereafter.”





















