FX.co ★ Offshore Yuan Retreats on Weak Fixing

The offshore yuan has depreciated to approximately 7.05 per dollar, stepping back from its previous position of over a one-year high after the People's Bank of China (PBOC) announced a weaker-than-anticipated daily rate. The PBOC set the midpoint at 7.0733 per dollar, which was 179 points below the Reuters consensus, marking the largest deviation to the weak side since November 2022. This adjustment illustrates the policymakers' intent to moderate the recent rise in the currency's value and emphasizes the PBOC's commitment to currency stability. Despite this decline, the yuan is on track for its strongest annual performance since 2020, bolstered by strengthening US-China relations and the softening of the US dollar. Investors are attentively awaiting the upcoming Central Economic Work Conference and the December Politburo meeting. It is anticipated that China will maintain its target of "around 5%" for annual economic growth next year, a goal that may lead Beijing to continue adopting supportive fiscal and monetary strategies to combat ongoing deflationary challenges.