China has set the renminbi at its strongest level against the US dollar in more than a year, signalling that authorities are prepared to tolerate a measured appreciation of the currency as export growth intensifies trade frictions with key partners.
The People’s Bank of China fixed the yuan at 7.03 per dollar, the firmest midpoint since late September 2024, reinforcing a trend that has seen the currency gain nearly 4 per cent against the dollar this year.
Market analysts interpret the move as a deliberate recalibration rather than a shift in policy direction. While the yuan has strengthened against the dollar, it has lagged the euro and other major currencies, limiting the overall impact on China’s export competitiveness.
Economists say easing trade tensions following the October tariff truce with Washington has reduced pressure on Beijing to suppress the currency. With tariff uncertainty receding, authorities appear more comfortable allowing the renminbi to recover, though within tightly managed limits. The spot rate continues to trade within the central bank’s permitted band around the daily fixing.
Despite this tolerance for modest appreciation, analysts stress that policymakers remain cautious, particularly as the exchange rate approaches the psychologically important 7-per-dollar threshold. A stronger currency risks squeezing exporters at a time when external demand remains the primary engine of growth, while domestic drivers such as property investment remain weak.
