Yuan Strengthens for Third Consecutive Week, Supported by Export Resilience
nashnova research
The onshore yuan touched 6.6897, its strongest since January 2023, on track for a third weekly gain; export resilience underpins the rally, but the PBOC governor's remarks hint Beijing is wary of a runaway appreciation.
How far has the yuan climbed?
The onshore rate closed Friday at 6.6907, after touching 6.6897 intraday — the strongest level since January 2023.
The PBOC set its daily fixing — the reference anchor for the market — at 6.7220, the strongest guide since February 2023.
This means → the central bank is actively tracking the market's direction, not pushing back against the rally.
Why is the yuan holding up against multiple headwinds?
Nanhua Futures notes that China's exports remain strong, providing the core support for yuan appreciation.
Pantheon Macroeconomics adds that exports are resilient despite tariff hikes, trade-rebalancing pressure, rising export prices, and a stronger yuan — four forces that would normally drag on shipments.
In plain terms = any one of those four headwinds should hurt exports; the fact that export data held up anyway gives the market a reason to keep buying the yuan.
How much did dollar weakness help?
The dollar index pulled back from a near-18-month high; Nanhua Futures attributes the slide to profit-taking and dovish Fed commentary.
U.S. September PPI posted its largest month-on-month rise in four and a half years, yet Nomura says the data is not enough to justify a Fed rate hike in October.
This means → rate-hike expectations were not reignited, capping the dollar's rebound and indirectly giving the yuan room to appreciate.
What is the PBOC worried about?
The PBOC governor said Thursday that global imbalances cannot be resolved by exchange-rate adjustments alone.
The market read this as Beijing signaling caution toward rapid yuan appreciation — some strengthening is fine, but too fast is not.
This reflects a balancing act: let the exchange rate mirror fundamentals, but prevent a runaway rally that would erode export competitiveness.
What comes next?
The next key data point is China's Q3 GDP, due Monday. A Reuters poll shows economists expect 4.4% year-on-year growth, up from a multi-year low.
What the market really wants to see is not the GDP headline itself but whether domestic demand is recovering beyond the export channel.
In plain terms = if growth is entirely export-driven and domestic demand remains weak, the sustainability of this yuan rally comes into question.
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