Onshore Yuan 6.7050 Midday -0.07% PBOC Mid-Point 6.7468 Snaps 10-Session Strengthening Streak Guidance Rate 497 Pips Weaker Than Reuters Estimate Dollar Index Three-Day Rise Flirting Eight-Week High Gavekal Baston: “China’s Latest Extraordinary Export Wave Showing Signs Of Cresting” PBOC Cautious About Pace Of Appreciation ECB: China Industrial Transformation Squeezing European Firms German Companies Biggest Hits European Auto Executives Local Content Rules Expanded Tariffs Plug-In Hybrids
China’s yuan softened against the dollar on Wednesday, September 23, after the People’s Bank of China set a weaker guidance rate for the first time in eleven sessions, snapping a ten-session strengthening streak as growing trade tensions with Europe added to concerns about the pace of currency appreciation. Business Recorder
Prior to market open, the PBOC set the mid-point rate at 6.7468; 497 pips weaker than a Reuters estimate, sustaining a pattern reflecting authorities’ desire for slower yuan appreciation. The onshore yuan changed hands at 6.7050 around midday, 0.07 per cent weaker than the previous day’s close. The dollar index rose for a third day, flirting with an eight-week high.
The yuan had climbed steadily ahead of the September 24 meeting between US President Donald Trump and Chinese leader Xi Jinping in Washington. Oxford Economics said the planned summit is “a sign the US-China relationship is becoming more predictable,” with markets focused on whether the two leaders will signal an extension to a trade truce struck last year.
But trade tensions between China and Europe are rising. The European Central Bank said on Tuesday that China’s industrial transformation is squeezing European firms out of global markets, with German companies taking some of the biggest hits. European auto executives and politicians have called for local content rules and expanded tariffs to include plug-in hybrid vehicles from China.
Andrew Baston of Gavekal Dragonomics warned that China’s “extraordinary export wave is showing signs of cresting,” and that the PBOC is already showing caution about the pace of currency appreciation it will permit. Fitch lowered its China 2026 growth forecast by 0.1 percentage point to 4.5%, citing increasing economic imbalances, and forecast only moderate yuan appreciation in 2027 and 2028.
The yuan is easing. The PBOC is managing. The export wave is cresting. The summit is tomorrow.
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