China sets yuan midpoint at 2-yr low, but firmer than forecast

China set its yuan midpoint at a two-year low against the dollar on Wednesday to reflect a buoyant dollar, but the guidance was set firmer than expectations for a sixth trading day in a row.

The People's Bank of China (PBOC) set the midpoint rate at 6.8906 per dollar prior to market open, 104 pips or 0.15% weaker than the previous fix of 6.8802, which was the weakest since Aug. 26, 2020. The fixing was much stronger than market projections at 200 pips firmer than Reuters' estimate of 6.9106.

Traders and analysts speculated that the firmer-than-expected midpoint fixings over the past week could be part of an official attempt to rein in recent rapid yuan losses.