China Currency Fix Weakens as Dollar Puts Yuan Strength to Test

China’s central bank set the daily guidance rate for the yuan at a weaker level for a fourth straight session, demonstrating flexibility in managing the currency amid the recent strength of the US dollar.

The People’s Bank of China set the daily reference for the yuan at 6.8195 per dollar on Wednesday, down from 6.8171 a day earlier. That was the longest streak of weaker fixings since April 2025, according to Bloomberg data.

The move followed the dollar’s to the highest level since November, reflecting increased bets on a rate hike by the Federal Reserve after Kevin Warsh ’s hawkish comments in his debut speech as chairman. The onshore yuan, the best-performing Asian currency this year, has also faced headwinds recently, weakening against the dollar for a sixth session on Wednesday.

The weaker official fixings, which are set daily by the PBOC and define a trading range for the onshore yuan, also reveal Beijing’s calm approach to calls from some European leaders for yuan appreciation. Last week, German Chancellor Friedrich Merz called for international talks on exchange rates to address the European Union’s widening trade deficit with China.

“Some near-term two-way movement is not only normal but also healthy,” said Lynn Song , chief Greater China economist at ING Bank NV, referring to recent yuan moves. “We have been in a fairly long window of yuan appreciation, and it is still outperforming relative to most currencies against the dollar since the Iran war. ”

Despite growing pressure from European leaders to address exchange rate concerns, Chinese policymakers are unlikely to be swayed, analysts say. This is partly due to PBOC’s preference for overall exchange-rate stability and its domestically driven approach of policy making, they said.

between China and Europe are scheduled to continue next week, with representatives from both the sides set to meet.

“Yuan’s appreciation pace may slow down in the near term, given the stronger dollar and rising odds that the Fed will hike rates this year, leading to a further widening of the interest rate differential,” said Becky Liu , head of Greater China macro strategy at Standard Chartered. But “the odds of China entering into any accord under German or EU pressure are next to zero.”

Onshore trading on Wednesday skewed toward stronger demand for dollars against the yuan, with more bids to buy the greenback than sell it. Some exporters delayed settlement in anticipation of more favorable levels, according to traders, who asked not to be identified discussing private matters.

A mixed macroeconomic backdrop, as reflected in recent data on exports, domestic demand and the property sector suggests that the fixing “fits with a cautious yuan read in the near term,” said Christopher Wong , strategist at Oversea-Chinese Banking Corp.

Despite the recent pullback, a broader measure shows that the yuan remains close to its strongest level since 2022 against a basket of its trading peers’ currencies, according to Bloomberg’s tracker of the CFETS RMB Index. The yuan has also strengthened 2.7% versus the dollar this year and 6.2% against the euro.