China slows yuan rally as PBOC sets softer 6.7829 parity rate

  • China is using softer daily fixes and state-bank dollar purchases to slow the yuan’s appreciation amid weak domestic demand.
  • The PBOC set the yuan’s central parity rate at 6.7829 on [date], versus 6.7809 previously, while August onshore spot turnover fell 26% to about $31.2 billion.
  • The yuan can trade within a 2% band around the daily midpoint, and analysts forecast a median year-end rate of 6.68 per dollar.

China is working to slow the yuan’s appreciation after a 20-month rally lifted the currency nearly 9% against the dollar to its strongest level in three and a half years. The People’s Bank of China (PBOC) set the USD/CNY central parity rate at 6.7829 on [date], slightly weaker than the previous fix of 6.7809; an earlier fixing was around 6.7840. The yuan has traded between 6.72 and 6.78 per dollar, while state-owned banks have been buying dollars and onshore spot-market turnover fell 26% in August to about $31.2 billion from $42.2 billion in July. The measures reflect concern that a stronger currency could undermine exports while consumer spending, investment and the property sector remain weak. Analysts see modest further appreciation, with a median year-end forecast of 6.68 yuan per dollar, although thinner trading could increase hedging costs and execution risks for multinational companies. The yuan’s gains and a trade surplus exceeding $1 trillion are also likely to intensify complaints from trading partners that China’s currency remains undervalued.

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