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Economic Times

China's yuan rises to 8-month high as PBOC moves to boost investor confidence

China's yuan has surged to an eight-month high against the dollar, fueled by growing confidence in the Chinese economy and anticipation of upcoming trade talks with the U.S. The People's Bank of China (PBOC) has guided the currency's strength, setting a firm midpoint rate. This appreciation aims to boost domestic demand and counter deflationary pressures amid ongoing trade uncertainties. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads China's yuan jumped to the strongest in eight months against the dollar on Thursday, reflecting growing confidence in the world's second-biggest economy as local stock and commodity prices rally while bond yields currency's strength, which was partly guided by China's central bank, also comes days ahead of a new round of economic and trade talks between China and U.S. has been sending conciliatory messages in the lead-up to next week's talks in Stockholm, while U.S. Treasury Secretary Scott Bessent has described trade with China as "in a good place."Both the onshore and offshore yuan rose to levels last seen in early November, erasing most of the losses incurred since U.S. President Donald Trump's election to the market opening, the People's Bank of China( PBOC ) set the midpoint rate at 7.1385 per dollar, its strongest since November 6 and 118 pips firmer than a Reuters estimate of 7.1503. The spot yuan is allowed to trade 2% either side of the fixed midpoint each PBOC's firmer-than-expected yuan midpoint guidance was "mainly meant to balance domestic demand and external conditions," said Xing Zhaopeng, senior China strategist at said the broad economy is facing deepening deflationary pressure and lingering tariff uncertainties from the United States. Yuan appreciation is conducive to increasing the allocation of yuan-denominated assets and the wealth effect should help expand domestic demand ... And that will boost market confidence and helps pull (China) out of deflation," he stronger-than-expected PBOC fixing lifted the spot market. The onshore yuan rose to a high of 7.1478 per dollar, the strongest since November 8, before last fetching 7.1532 as of 0242 offshore counterpart followed the strengthening trend to rise past the 7.15 per dollar level for first time since November. It last traded at 7.1503 as of 0242 was initially singled out with tariffs exceeding 100% and has until August 12 to reach an agreement with the White House to keep Trump from reinstating additional import curbs imposed during tit-for-tat tariff exchanges in April and May.