The offshore yuan strengthened to around 6.69 per dollar on Thursday, hovering near its highest level since July 2022, even as the IMF criticized China’s policy support as inadequate and highlighted the currency’s undervaluation. Beijing has rolled out mortgage subsidies and expanded central bank support for targeted sectors, while the State Council has vowed to implement “a package of practical and effective additional policies” to achieve this year’s economic objectives.
Despite these steps, the IMF has urged more forceful action, estimating that in real terms the yuan will be undervalued by 17.3% to 25.3% in 2026, with a midpoint estimate of 21.3%. The valuation of China’s currency has become a flashpoint in global trade debates, raising questions over whether it exacerbates trade imbalances or simply mirrors broader economic fundamentals. The PBoC has countered that the IMF’s analysis should not be interpreted as a verdict on the yuan’s nominal exchange rate, nor as a justification for engineering an appreciation against specific currencies.
