Yuan Climbs Past 7 Per Dollar Onshore for First Time Since 2023

The yuan strengthened beyond the key 7-per-dollar level in the more tightly controlled onshore market for the first time since 2023, signaling China’s comfort with further currency appreciation.

The currency rose as much as 0.1% to 6.9960 in local trading on Tuesday, after the People’s Bank of China set a weaker daily reference rate. The move came after the offshore yuan the closely watched 7 level in late December.

The yuan’s breakthrough in the local market, where it’s confined by a 2% trading band centered around the reference rate, is often considered more significant than the moves in largely unrestricted offshore trading. Authorities also keep a firmer grip onshore, where state banks were more visible in December helping with official efforts to slow the yuan’s climb.

Beijing has steered the yuan toward appreciation to appease trading partners but sought to engineer a gradual pace of gains to avoid a surge of hot-money inflows. The PBOC said in a report released in late December that it maintain exchange rate flexibility, while guiding expectations and guarding against “overshooting risks.”