Chinese Yuan Posts Strongest Gain in Nearly Three Years

The Chinese yuan surged to its strongest level in nearly 32 months on Wednesday, benefiting from a broad sell-off in the US dollar and a carefully managed policy push from Beijing to support the currency.

The onshore yuan climbed to 6.9449 per dollar, marking its highest level since May 15, 2023, before easing slightly to 6.9457. Meanwhile, the offshore yuan remained largely stable, trading near 6.939 per dollar, reflecting steady investor sentiment outside mainland China.

Before the market opened, the People’s Bank of China (PBOC) set the daily midpoint fixing at 6.9755 per dollar, its strongest fixing since mid-May 2023. The move represented a shift of more than 100 basis points from the previous session, the largest single-day adjustment since August, though it remained weaker than market estimates by around 524 basis points.

Traders and analysts say the signal is clear: Beijing is allowing the yuan to strengthen, but only gradually.

“The central bank is reinforcing the yuan in steps, while keeping fixings below market expectations,” one trader noted. “This helps discourage one-way bets on rapid appreciation and reduces the risk of market disruption.”

The yuan’s rally comes amid accelerating global dollar weakness, as investors reassess the US currency’s outlook. Analysts at China Construction Bank expect the US Dollar Index to remain under pressure through 2026, potentially reaching cyclical lows.

“With the dollar unlikely to recover meaningfully, external pressure on the yuan should ease significantly,” the bank said in a note, adding that stronger performance in Chinese equities could attract foreign capital inflows and further support the currency.

So far this month, the yuan has gained 0.7% against the dollar, building on a 4.5% rise in 2025. The appreciation has been driven by a combination of factors, including seasonal demand for foreign-exchange settlements by exporters and growing expectations of continued yuan strength.

Ahead of the Lunar New Year holiday, currency settlement needs are expected to remain elevated. With most traders anticipating further gains, Chinese exporters have increasingly adopted a strategy of selling dollars into strength, according to Nanghua Futures.