Offshore Yuan Under Pressure from Eased Monetary Tone and Weaker PBOC Guidance

Beijing | EcoPulse24

The offshore yuan traded near 6.98 against the US dollar in Beijing, as markets cautiously interpreted the monetary policy signals from the People's Bank of China (PBOC). The central bank reaffirmed its commitment to lowering the reserve requirement ratio and interest rates in 2026 to ensure sufficient liquidity, while describing its policy as 'appropriately accommodative.'

Meanwhile, the PBOC set the daily midpoint at 7.0187 per dollar, marking the first weaker guidance in four sessions and coming in softer than Reuters' estimates, reflecting increased caution in currency support.
Some pressure was absorbed by robust year-end foreign exchange settlements, as exporters converted overseas earnings to meet local obligations, including pre-Lunar New Year payments.

Analysis
The easing tone and weaker midpoint fix place the currency under close watch, with market attention turning to this week’s upcoming Chinese inflation figures as an additional signal for future monetary policy direction.