China's Central Bank Sets Yuan Price in Line with Expectations for 1st Time in Year

China's central bank set the daily reference rate for the yuan at 7.13 per dollar, broadly in line with expectations for the first time in more than a year.

The difference between the set price and expectations, according to a Bloomberg survey, was the smallest since June 2023.

In recent weeks, the yuan has been able to compensate for a large portion of its losses against the dollar, which declined with expectations of a cut in interest rates by the US Federal Reserve next month.

With the world's second-largest economy achieving a huge trade surplus in recent years and domestic interest rates in China falling below those in the United States, Chinese exporters have begun stockpiling dollars in anticipation of a weak yuan.

Some investors also borrowed in yuan to invest in higher-yielding assets abroad, a strategy known as a "carry trade."

"Data last week showed China’s fixed-asset investment unexpectedly slowed to 3.6 per cent in the first seven months of the year and home prices last month plunged the most since 2015 on a year over year basis," according to The Business Times.