Beijing, June 21, 2025 —
China’s yuan (CNY) firmed against the US dollar on Friday, buoyed by the People’s Bank of China’s (PBOC) stronger daily fixing and broad-based weakness in the greenback. The central bank set the midpoint rate at 7.1695, its firmest level since March 17, and 106 pips stronger than Reuters’ estimate — a clear signal of official support for the currency amid macroeconomic uncertainty and tense Sino-US trade negotiations.
In spot trading, the onshore yuan climbed 0.08% to 7.1811, while the offshore yuan (CNH) rose 0.06% to 7.1819. The CNY has now appreciated 0.3% in June and 1.7% year-to-date, positioning it among the better-performing emerging market (EM) currencies this year.
PBOC Anchors Market Confidence with Stronger Fixings
Market analysts say the central bank’s deliberate effort to guide the yuan stronger in recent sessions reflects a desire to boost confidence in the Chinese economy, which has shown signs of uneven recovery. Despite recent monetary easing moves, the PBOC on Friday kept its benchmark lending rates unchanged, indicating a wait-and-see approach following its stimulus measures last month.
This balancing act — easing credit while supporting the currency — is aimed at encouraging domestic consumption without triggering capital outflows or yuan depreciation.
Euro Zone Bond Yields Dip Amid Geopolitical Jitters and Cautious ECB Outlook
Dollar Weakness Boosts Yuan and EM Currencies
The yuan’s rally also coincides with a sluggish dollar, as the U.S. faces mounting concerns over its fiscal deficit, and global investors grow wary of U.S. assets in light of the ongoing trade war and Middle East tensions. The dollar index is headed for a 0.5% weekly gain, but is still struggling to find consistent strength, providing tailwinds for EM currencies.
“Emerging market currencies have held onto their May gains and are marginally stronger versus the dollar month-to-date,” Goldman Sachs noted in a report, singling out the yuan and other low-yielding Asian currencies for continued outperformance.
Yuan Internationalisation Back in Focus
Sentiment around the yuan also received a lift earlier this week when PBOC Governor reaffirmed China’s commitment to promoting yuan internationalisation during the 2025 Lujiazui Forum. This announcement aligns with Beijing’s longer-term ambition to reduce reliance on the dollar in trade settlements and reserves.
Hong Kong Dollar Hits Weak End of Band
In related developments, the Hong Kong dollar (HKD) touched 7.85 per USD — the weak end of its trading band — for the first time since May 2023, according to LSEG data. This movement suggests capital outflows and pressure on the currency board system, even as mainland China shores up confidence in the yuan.
Outlook: Range-Bound but Firm Bias
With Middle East tensions and US policy uncertainties still in play, traders expect the yuan to remain range-bound in the near term, but with a slight upward bias if the PBOC continues to support the midpoint aggressively.
However, analysts warn that further gains could be capped if global risk sentiment deteriorates or if the US Federal Reserve alters its dovish stance later this year.
