The offshore yuan strengthened to around 6.69 per US dollar on Friday, extending gains from the previous session and reaching its strongest level since July 2022 as increasingly firm daily yuan fixings from the People’s Bank of China continued to support the currency.

The PBOC set its daily midpoint at 6.7521 per dollar, stronger than Thursday’s 6.7580, marking an upward bias in the fixing for an eighth consecutive session. That represents the longest consecutive run of stronger fixings since 2023.

The latest move has strengthened expectations that Chinese policymakers may be increasingly comfortable with a stronger yuan ahead of President Donald Trump’s scheduled meeting with Chinese President Xi Jinping in the US on September 24.

A stronger yuan could also have implications for the wider US-China trade relationship. Western officials have repeatedly argued that an undervalued Chinese currency can provide Chinese exporters with a competitive advantage, making the exchange rate an important component of the broader trade relationship.

Meanwhile, US Treasury Secretary Scott Bessent is scheduled to meet Chinese Vice Premier He Lifeng this weekend, adding another major diplomatic and economic event for currency traders to monitor.

The offshore yuan is therefore being supported by a combination of PBOC policy signals, improving market confidence in the currency and expectations surrounding high-level US-China discussions, although the strength of the move will depend on whether the central bank continues to tolerate appreciation.

Chinese Yuan Market Snapshot

Why Is the Offshore Yuan Rising?

The immediate driver is the increasingly firm daily fixing from the People’s Bank of China.

The PBOC set the yuan midpoint at 6.7521 per dollar, compared with 6.7580 on Thursday.

A lower USD/CNY fixing means the yuan is being valued more strongly against the dollar.

The significance is not simply the latest fixing itself, but the consistency of the move.

The PBOC has now established a stronger fixing bias for eight consecutive sessions, the longest such run since 2023.

That sends an important signal to financial markets.

Rather than resisting yuan appreciation aggressively, Chinese policymakers appear to be allowing a firmer currency environment to develop.

PBOC Fixing Becomes the Key Yuan Signal

China’s managed exchange-rate system means the daily PBOC midpoint is closely watched by traders.

The central bank does not simply allow USD/CNY to move without policy influence. The daily fixing provides an important reference point for the trading range and can influence market expectations regarding the preferred direction of the currency.

The current sequence of stronger fixings is therefore significant.

Eight consecutive sessions of upward bias suggest that policymakers are currently tolerating, or potentially encouraging, greater yuan strength.

For currency traders, the next question is whether this represents a temporary policy adjustment or the beginning of a more sustained period of yuan appreciation.

Offshore Yuan Reaches Strongest Level Since July 2022

The offshore yuan’s move toward 6.69 per dollar takes the currency to its strongest level since July 2022.

That is a substantial change from the weaker yuan environment that has characterised portions of the US-China trade and monetary-policy cycle.

The offshore market is particularly important because CNH trades outside mainland China’s tightly managed onshore currency market.

When CNH strengthens alongside a firmer PBOC fixing, the two markets are sending a broadly consistent message.

The latest move therefore reflects more than a single session of speculative trading.

Trump-Xi Meeting Adds a Major Currency Catalyst

The timing of the yuan’s strength is particularly important.

President Donald Trump is scheduled to meet Chinese leader Xi Jinping in the United States on September 24.

The exchange rate could become part of the broader discussions surrounding trade and economic relations between the two countries.

A stronger yuan reduces the price competitiveness of Chinese exports when measured in US dollars, all else being equal.

That can potentially address some of the concerns raised by Western policymakers regarding China’s export competitiveness.

For Beijing, however, currency policy must also balance export competitiveness against other objectives, including domestic purchasing power, imported inflation and financial stability.

The currency therefore remains an important policy instrument within the broader US-China economic relationship.

US-China Trade Tensions Keep the Yuan in Focus

Currency valuation has long been an important issue in US-China trade discussions.

Western officials have argued that an undervalued yuan can give Chinese exporters a price advantage in international markets.

A stronger yuan would mechanically reduce that advantage, assuming other factors remain unchanged.

That does not mean currency appreciation alone would resolve broader trade disputes, but it does make the exchange rate an important variable ahead of the Trump-Xi meeting.

The current PBOC fixing behaviour is therefore being interpreted against a much wider geopolitical and economic backdrop.

Bessent-He Lifeng Meeting Adds Another Immediate Catalyst

US Treasury Secretary Scott Bessent is also scheduled to meet Chinese Vice Premier He Lifeng this weekend.

The meeting gives markets another opportunity to assess the direction of US-China economic relations ahead of the Trump-Xi summit.

Currency traders will be watching for signals concerning:

• Trade negotiations
• Tariff policy
• China’s export strategy
• Currency valuation
• Bilateral economic cooperation
• Financial-market stability

Any change in the tone of US-China economic discussions could influence expectations for the yuan.

A Stronger Yuan Could Reduce Export Competitiveness

There is an important downside for Chinese exporters if the yuan continues strengthening.

When the yuan appreciates against the dollar, Chinese goods become more expensive in foreign-currency terms, assuming exporters do not adjust their domestic prices.

That can reduce the price advantage of Chinese exporters in international markets.

This is one reason currency appreciation has to be considered alongside China’s broader trade strategy.

A stronger yuan may help address international criticism surrounding currency valuation, but excessive appreciation could create challenges for exporters operating in highly competitive global markets.

A Stronger Yuan Could Also Reduce Import Costs

The other side of the equation is the benefit to Chinese importers and domestic consumers.

A stronger yuan reduces the local-currency cost of dollar-denominated imports, assuming other exchange rates and prices remain unchanged.

That can benefit businesses importing:

• Energy
• Commodities
• Industrial equipment
• Technology
• Raw materials

It can also increase Chinese purchasing power internationally.

This creates a policy trade-off between export competitiveness and import purchasing power.

Bullish Sentiment for the Yuan

1. PBOC Fixings Are Becoming Increasingly Firm

The PBOC has strengthened its daily midpoint for eight consecutive sessions.

That represents a clear shift in the recent fixing bias.

2. Offshore Yuan Is at Its Strongest Since 2022

CNH has reached approximately 6.69 per dollar, its strongest level since July 2022.

3. Policymakers Appear More Comfortable With Yuan Appreciation

The continued stronger fixing bias suggests that the PBOC is currently tolerating a firmer currency.

4. US-China Diplomatic Engagement Could Support Stability

The upcoming Trump-Xi meeting and Bessent-He Lifeng discussions could reduce some uncertainty surrounding bilateral economic relations if negotiations remain constructive.

5. Stronger Yuan Reduces Import Costs

An appreciating yuan can lower the domestic cost of dollar-denominated commodities and other imports.

Bearish Sentiment for the Yuan

1. Stronger Currency Can Pressure Chinese Exporters

A stronger yuan can make Chinese exports more expensive in foreign-currency terms and reduce price competitiveness.

2. US-China Trade Policy Remains Uncertain

The upcoming diplomatic meetings introduce significant event risk.

Any deterioration in trade relations could reverse recent yuan gains.

3. PBOC Policy Can Change

The current eight-session fixing sequence is significant, but it does not guarantee continued appreciation.

If policymakers become concerned about excessive currency strength, the fixing bias could change.

4. Global Dollar Strength Remains Relevant

Changes in US monetary policy and global dollar demand can influence USD/CNH even when Chinese domestic factors are supportive.

5. Export Competitiveness Remains a Policy Consideration

Beijing must balance the benefits of a stronger yuan against the potential impact on exporters and external demand.

The Yuan Is Becoming a Major US-China Trade Signal

The latest yuan appreciation is about more than the currency market itself.

The exchange rate has become an increasingly important indicator of how China is managing the balance between trade competitiveness, financial stability and international economic relations.

The PBOC’s stronger fixing bias suggests that policymakers are currently comfortable allowing the yuan to strengthen.

That is particularly notable ahead of high-level US-China meetings.

If the stronger fixing trend continues, markets could increasingly interpret it as evidence that Beijing is willing to accept a stronger currency as part of its broader economic strategy.

Offshore and Onshore Yuan Signals Are Important

The strongest confirmation would come from continued alignment between the onshore yuan, offshore yuan and PBOC fixing.

The current situation is notable because all three indicators are pointing toward greater yuan strength:

• CNH: around 6.69 per dollar.
• PBOC fixing: 6.7521.
• Fixing bias: stronger for eight consecutive sessions.

The sustainability of that alignment will be critical.

If offshore yuan strength becomes significantly detached from the PBOC’s preferred fixing range, volatility could increase.

If both continue moving in the same direction, the market could gain greater confidence that Chinese policymakers are comfortable with the stronger currency.

What Traders Are Watching Next

Yuan traders will be focused on:

1. The next PBOC daily fixing — continued stronger fixings would reinforce the current policy signal.
2. USD/CNH around 6.69 — whether the offshore yuan can sustain its strongest level since July 2022.
3. The Trump-Xi meeting on September 24 — potentially significant for trade and currency expectations.
4. The Bessent-He Lifeng meeting — an immediate indicator of US-China economic dialogue.
5. US tariff policy — changes could quickly affect yuan expectations.
6. Chinese export data — particularly important as currency appreciation affects competitiveness.
7. China’s import demand — a stronger yuan could support purchasing power for imported commodities.
8. Future PBOC fixings — the continuation or reversal of the current eight-session strengthening bias will be closely monitored.

Currency Hedger View

The USD/CNH exchange rate is particularly important for companies involved in Chinese international trade.

Chinese exporters receiving US-dollar revenues face a different currency exposure from Chinese importers paying for goods and commodities in dollars.

A stronger yuan can reduce the local-currency value of dollar revenues for exporters, while simultaneously reducing the local-currency cost of dollar-denominated imports.

For international companies trading with Chinese counterparties, movements in USD/CNH and USD/CNY can therefore materially affect commercial margins.

Currency Hedger, part of Octalas Group, focuses on foreign-exchange exposure and currency-risk management, providing an additional perspective for businesses managing cross-border payments and currency exposure.

Today Markets View

The offshore yuan has strengthened to around 6.69 per dollar, reaching its strongest level since July 2022 as the PBOC continues to signal a firmer currency through its daily fixing.

The latest midpoint of 6.7521, compared with 6.7580 previously, represents the eighth consecutive stronger fixing, the longest such sequence since 2023.

The timing is significant.

With the Trump-Xi meeting scheduled for September 24 and Treasury Secretary Scott Bessent due to meet Vice Premier He Lifeng this weekend, the yuan is entering an important period for US-China economic and trade discussions.

A stronger yuan could reduce the price competitiveness of Chinese exports and potentially address some Western concerns regarding currency valuation. At the same time, it could lower the cost of imported commodities and strengthen Chinese purchasing power internationally.

The key question for currency markets is whether the PBOC will continue allowing the yuan to appreciate after the current diplomatic events pass.

For now, the PBOC’s stronger fixing bias, the offshore yuan’s 2022 high and heightened US-China engagement are keeping yuan strength firmly in focus.

Louis Roche, Analyst, Today Markets

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