The People’s Bank of China (PBOC) set its USD/CNY reference rate at 7.1090 on Wednesday, marking a shift from the previous rate of 7.1286. This move comes at a time when the Chinese yuan is under pressure, primarily due to the continued strength of the U.S. dollar in global markets.
The lower reference rate indicates the central bank’s attempt to stabilize the yuan amid ongoing economic challenges in China. The PBOC’s action could be seen as part of its broader strategy to maintain liquidity and cushion the currency from excessive volatility.
The U.S. dollar has been buoyed by strong economic data from the United States, reinforcing its dominance in the foreign exchange market. Meanwhile, China’s economic recovery post-pandemic remains slower than anticipated, adding pressure to the yuan.
Analysts suggest that the PBOC is likely to continue fine-tuning its policy tools to balance economic growth and currency stability. While the yuan remains weaker against the dollar, further adjustments to the reference rate may be expected in the coming weeks as the PBOC seeks to control market expectations and prevent excessive currency depreciation.
This latest move adds to the growing speculation about China’s next steps in managing its foreign exchange policy amid global economic uncertainties.
