PBOC moderates yuan appreciation to support Chinese exporters

The People's Bank of China (PBOC) is actively moderating the appreciation of the yuan to protect the country's export-driven economy. While the currency rose 8.7% from its recent low in April 2025 to reach a three-and-a-half-year high of 6.744 against the dollar in June, the central bank has implemented measures to slow this momentum.

By utilizing a managed exchange rate system where the onshore yuan moves within a 2% band around a daily midpoint, the PBOC has systematically announced levels weaker than market prices. This strategy aims to prevent an overreaction in the exchange rate and maintain stability. This intervention is intended to support exporters, as a significantly stronger renminbi can erode the profit margins of companies selling goods abroad, despite a year-on-year growth in dollar-denominated exports of 18.5% during the first seven months of the year.