The People's Bank of China (PBoC) set the USD/CNY fix at 6.7989 on Friday, marking the first time since February 2023 that the fix was set below 6.80. This level was also lower than the previous fix of 6.8036, though it remained 51 pips weaker than the Bloomberg consensus of 6.7938 [1]. According to OCBC strategists Sim Moh Siong and Christopher Wong, this move suggests that Chinese policymakers are comfortable with further appreciation of the renminbi (RMB), while still managing the pace of gains [1].
Following the stronger fix, USD/CNH dipped, with the last quoted level at 6.7820. Technical analysis indicates mild bullish momentum for USD/CNH, with support identified at 6.75/76 and resistance at 6.80 and 6.8320. The strategists note that two-way trade remains likely, and the gap between the fix and market expectations will be important for interpreting the PBoC’s policy bias going forward [1].
The OCBC team highlights that further fixes below 6.80 should be supportive of RMB appreciation, but caution that the central bank appears mindful of the pace of gains. Market participants are expected to closely monitor the fix relative to consensus to gauge the PBoC’s intentions [1].
CONCLUSION
The PBoC's decision to set a stronger yuan fix below 6.80 signals a willingness to allow gradual RMB appreciation, though the central bank remains cautious about the speed of gains. Market participants are likely to interpret further fixes below this level as supportive for the RMB, with attention focused on the gap between the fix and market expectations.