Renminbi strengthens as PBOC signals resistance to depreciation

The Chinese renminbi has shown modest strength against the US dollar and the euro, despite broader global dollar strength. Offshore USD/CNH closed at 6.6930, representing a 0.20% appreciation. The People’s Bank of China (PBOC) set the USD/CNY fixing at 6.7330, which was stronger than market estimates, signaling Beijing’s intent to limit depreciation pressures.

This currency movement comes amid increasing pressure from European officials, including German Chancellor Friedrich Merz, regarding China’s trade surplus and exchange-rate policies. Critics have suggested an undervalued renminbi provides an unfair trade advantage. In response, the PBOC stated that China does not intend to depreciate its currency to support exports, attributing its competitiveness to manufacturing strength.

The renminbi also appreciated by approximately 0.35% against the euro. This shift follows a period where the PBOC appeared to be slowing yuan appreciation, but recent sessions have seen a turning point with consecutive stronger-than-expected fixings.