China's Central Bank Signals Yuan Strength With Key Rate Shift

The People's Bank of China adjusted its yuan guidance rate to stronger than 7-per-dollar, a first since May 2023, indicating potential appreciation. This move comes despite the central bank's trend of setting the rate weaker than market forecasts, marking the largest deviation noted since 2022.

In a significant monetary policy move, China's central bank has raised its official yuan guidance rate above the psychologically crucial 7-per-dollar level for the first time since May 2023.

The People's Bank of China (PBOC) set the official midpoint rate at 6.9929 per dollar before markets opened on Friday. This is the strongest level recorded since May 17, 2023, highlighting the central bank's possible shift in stance towards yuan appreciation.

Despite this move, the central bank continues to set rates weaker than market expectations, a practice appearing consistently since November last year. The deviation recorded on Friday was 448 pips weaker than a Reuters estimate, marking the largest such discrepancy noted since data tracking began in 2022.

(With inputs from agencies.)