PBoC: Maintain basic stability of yuan exchange rate
TL;DR
The People's Bank of China (PBoC) is maintaining the yuan's basic stability through managed appreciation, allowing gradual strengthening against the U.S. dollar to support economic goals and reduce volatility. This strategy is backed by China's resilient economy and robust foreign exchange reserves.
Tags
PBoC: Maintain basic stability of yuan exchange rate
PBoC Emphasizes Yuan Exchange Rate Stability Amid Managed Appreciation
The Chinese yuan (CNY) has extended its rally against the U.S. dollar, reaching its strongest level in nearly three years on February 26, 2026, as the People’s Bank of China (PBoC) signaled tolerance for a measured appreciation. The PBoC set the yuan’s daily reference rate at 6.9228 per dollar, strengthening it for the second consecutive session, while the offshore yuan rose to 6.8357, reflecting robust foreign exchange inflows and improved U.S.-China economic relations.
The central bank’s approach underscores its commitment to maintaining the yuan’s “basic stability” at reasonable equilibrium levels, balancing market forces with policy guidance. According to Khoon Goh, head of Asia research at ANZ Banking Group, the PBoC aims to ensure appreciation occurs at a “trot, not a gallop,” to avoid excessive volatility. This strategy aligns with China’s broader goals of reducing trade frictions, supporting capital inflows, and advancing the yuan’s internationalization.
Domestically, the yuan’s strength is supported by China’s resilient economy, which grew 5% year-on-year in 2025, driven by robust exports and stabilizing domestic demand. Seasonal factors, including year-end foreign exchange settlements by exporters, have also bolstered demand for the currency. Meanwhile, the U.S. dollar’s weakness, fueled by shifting Federal Reserve policy and global risk-on sentiment, has created favorable conditions for non-U.S. currencies.
The PBoC employs a managed floating exchange rate system, with daily reference rates influenced by overnight market movements, global currency trends, and domestic economic data. Recent interventions, such as adjusting the reference rate below market expectations (a 610-pip gap from trader forecasts), highlight the central bank’s subtle guidance to temper rapid appreciation.
Looking ahead, the PBoC remains focused on preventing “exchange rate overshooting” while allowing the yuan to function as a macroeconomic stabilizer. China’s robust foreign exchange reserves ($3.2 trillion), stable inflation (2.1% year-on-year), and ongoing financial reforms provide a solid foundation for long-term stability. As global markets navigate shifting monetary policies and geopolitical dynamics, the yuan’s trajectory will likely reflect a blend of domestic fundamentals and PBoC pragmatism.
According to Bloomberg: Bloomberg, according to Global Times: Global Times, according to InvestingLive: InvestingLive, according to BitcoinWorld: BitcoinWorld.
