Automatically translated version. May contain inaccuracies compared to the original.
The Chinese yuan on Monday, 21 September, rose to its strongest level against the US dollar in more than three and a half years. The currency reached 6,6957 yuan per dollar, its strongest level since 16 January 2023. This was reported by Hlavkom citing Reuters.
The People’s Bank of China changed the currency reference rate
Before trading began, the People’s Bank of China set the daily midpoint rate at 6,7487 yuan per dollar. That is the strongest reading since February 2023.
At the same time, the central bank’s set rate was weaker than analysts had expected. On the onshore market the yuan can fluctuate within 2% of the daily fixed midpoint.
For almost a year the People’s Bank of China had been setting the daily midpoint weaker than market expectations. That was seen as a way to restrain excessive appreciation of the Chinese currency.
However, in September the official midpoint began to strengthen more quickly. The gap between the central bank’s set rate and market forecasts narrowed, which may indicate a loosening of the restraints on yuan appreciation.
The currency strengthens ahead of Trump–Xi meeting
The yuan’s strengthening is occurring ahead of the planned meeting between US President Donald Trump and Chinese leader Xi Jinping.
Ahead of the leaders’ talks, representatives of the two countries held meetings on trade and economic issues. The parties, in particular, discussed the further relationship between the world’s two largest economies.
What’s happening with the yuan
The strengthening of the Chinese currency is happening against a backdrop of broader rising demand for the yuan. The People’s Bank of China’s easing of limits on the currency’s appreciation gives the market more room for further gains.
At the same time, analysts warn against concluding that Beijing has begun deliberately stimulating a sustained strengthening of the yuan. The current dynamics may be related both to market factors and to authorities’ desire to maintain stability in the currency market ahead of important international negotiations.
Ukraine also saw updated exchange rates. The National Bank set the official dollar rate on 21 September at 44,6743 UAH, the euro at 51,1981 UAH, and the Polish zloty at 11,7356 UAH. Meanwhile, in banks the cash dollar was sold on average for 44,83–45,10 UAH, and the euro for 51,75–51,90 UAH. Over the week the dollar gained, while the euro, zloty, pound and Swiss franc fell.
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