Global Market: Yuan holds near four-year high as China tempers appreciation pace

China’s yuan held steady near a four-year high against the US dollar on Tuesday as the central bank moderated its daily currency guidance, while broader foreign exchange markets remained subdued ahead of key interest rate decisions in the United States, Europe and Japan.

The onshore yuan was largely flat at 6.6684 per dollar, staying close to the strongest level it reached since 2022 in the previous session. The offshore yuan traded at 6.6680 per dollar, down around 0.01% during Asian trading.

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Before the market opened, the People’s Bank of China (PBOC) set the yuan’s daily midpoint at 6.7171 per dollar, weaker than Monday’s fixing, which was the strongest since February 2023. The midpoint was also 440 pips weaker than a Reuters estimate.

China allows the onshore yuan to trade within a 2% range on either side of the daily midpoint, giving the central bank a key mechanism to influence the currency’s movements.

The PBOC has gradually strengthened its official daily guidance for the yuan but has consistently set the midpoint weaker than market expectations for nearly a year. Traders and analysts view the approach as an effort to manage the pace of the currency’s appreciation rather than allow it to strengthen too rapidly.

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The yuan has gained 0.5% against the dollar this month and 4.9% so far in 2026. Demand from companies converting export earnings into yuan, supported by robust Chinese export growth, has helped sustain the currency despite continued strength in the greenback.

Data released on Tuesday showed that China’s industrial profits grew at a faster pace in September. However, an increasingly uneven economic recovery continued to weigh on corporate earnings, highlighting persistent challenges for the world’s second-largest economy.

Chris Weston, head of research at Pepperstone, said the dollar-yuan exchange rate could consolidate within a narrow range over the next one to two weeks, indicating that the PBOC may be comfortable with the currency’s current level.

Elsewhere, the dollar index, which measures the US currency against six major peers, edged up 0.029% to 102.05.

Currency markets broadly remained range-bound as investors awaited interest rate decisions from the US Federal Reserve, the European Central Bank and the Bank of Japan this week. Their policy signals are expected to influence expectations for global borrowing costs and provide fresh direction for major currencies.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)