The offshore yuan strengthened to around 6.64 per dollar on Monday, extending its advance for a fifth straight session and marking its firmest level since June 2022. The move followed the People’s Bank of China’s announcement of a shift in its short-term monetary policy framework toward using the overnight rate as its main operational target.
Under the revised framework, the central bank will conduct daily overnight reverse repo operations at a fixed rate of 1.25%, positioning the overnight rate to become its primary policy anchor and gradually supplant the long-standing seven-day benchmark. The newly announced 1.25% rate is below the current seven-day reverse repo rate of 1.4% and is broadly consistent with market expectations and prevailing funding costs.
At the same time, weak official PMI figures underscored ongoing economic headwinds. The manufacturing PMI slipped to a three-month low of 49.3 in October 2026 from 50.1 in September, while the non-manufacturing PMI fell to 49.7 from 50.2, signaling contraction for the sixth time in 2026.
