China’s central bank has set the yuan’s daily reference rate against the US dollar at its strongest level in more than three years, as major global banks grow increasingly optimistic about the Chinese currency, News.Az reports, citing SCMP.

The People’s Bank of China fixed the yuan’s midpoint rate, also known as the daily fixing rate, at 6.8349 per US dollar on Thursday, marking its strongest level since February 2023.

The adjustment came after the offshore yuan rose by 0.22% on Wednesday, following a period of volatility over the past week. By early afternoon on Thursday, the offshore yuan was trading at 6.803 against the US dollar.

The yuan has been gradually strengthening since early last year, despite intermittent fluctuations, supported by China’s resilient export performance and a weakening US dollar. Several global financial institutions have recently forecast further gains for the currency.

Bank of America stated in a note on Wednesday that it expects the yuan to strengthen to 6.70 per US dollar by the end of the year. The projection was based on what it described as “a resolution of the Iran conflict and China’s preference for FX [foreign exchange] stability in times of global stress.”

The bank also said that last week’s meeting between US President Donald Trump and Chinese President Xi Jinping — which concluded without major disruptions — signaled “a stabilisation of relations and opens the door to some goodwill yuan appreciation.”

However, it added that China’s domestic economy remains weak and heavily reliant on exports, which could limit the currency’s longer-term strength.

News.Az 

By Nijat Babayev