The offshore yuan traded around 6.91 per dollar on Wednesday, hovering near its strongest level since April 2023. The currency was supported by a firm daily fixing, even as consumer inflation slowed and monetary policy remained accommodative. The People’s Bank of China set the midpoint at 6.9438 per dollar, its strongest since May 11, 2023, though still weaker than market projections. This suggests the PBOC is allowing the yuan to appreciate in a controlled and gradual fashion.
Further gains in the yuan were partly restrained by the central bank’s reiterated commitment to a "moderately loose" monetary stance, with a focus on sustaining stable growth and fostering a reasonable recovery in prices. The guidance came ahead of data showing that annual consumer inflation eased to 0.2% in January 2026 from 0.8% in December, a deceleration largely attributable to base effects. At the same time, producer price deflation narrowed more than expected to 1.4%, helped by firmer commodity prices and regulatory measures aimed at curbing excessive competition among firms.
