China's yuan climbed to a fresh four-year high against the US dollar on Monday, extending what Reuters described as its longest winning streak since May, as softer oil prices and US Treasury yields weighed on the greenback ahead of key policy meetings at home and overseas.
Source: Reuters
In the spot market, the onshore yuan hit a high of 6.6682 per dollar at one point, the strongest level since June 2022, before last trading at 6.6691 as of 0252 GMT, Reuters reported. Its offshore counterpart last fetched 6.6688 per dollar, up about 0.01% in Asian trade. If the gains hold to the late-night close, the onshore yuan will have booked an eighth straight session of rises.
Before the market opened, the People's Bank of China set the midpoint rate at 6.7162 per dollar, its strongest since February 2, 2023. The China Foreign Exchange Trade System, cited by People's Daily, said the central parity rate strengthened 18 pips to 6.7162 on Monday, and that the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
Source: People's Daily / China Foreign Exchange Trade System
Beijing is leaning against a faster rise
Monday's midpoint was 471 pips weaker than a Reuters estimate of 6.6691 - its largest weak-side deviation since September 23. The central bank has been gradually strengthening its daily guidance this year, but at levels weaker than market expectations, suggesting it is seeking to manage the pace of appreciation, traders and analysts said.
"The PBOC continues to resist a faster pace of appreciation via weaker than-market-expected fixings," analysts at Barclays said in a note cited by Reuters. "We think the PBOC's reaction function points to a stronger floor against disorderly weakness, while the fixing should continue to constrain the pace of gains as the trade-weighted currency strengthens."
A crowded week for central banks
Investors were cautious ahead of major central bank meetings due later this week, with the US Federal Reserve, Bank of Japan and European Central Bank widely expected to keep rates unchanged while maintaining a hawkish tone, Reuters reported. Attention will also turn to China's fifth plenum for fresh policy clues.
For Punjabi and Indian workers, exporters and families receiving money across borders, a stronger yuan and a softer dollar can shift import costs, remittance values and Asian currency moves through the week - which is why traders are watching the fixings and the central bank decisions together.