Offshore yuan hits 3-year high on Politburo stimulus pledge

China's offshore yuan rose to a fresh three-year high on Friday after the People's Bank of China held its daily fixing rate stronger than 6.79 per US dollar for a third consecutive session, while a high-level Communist Party meeting reinforced expectations of further policy support for the economy.

PBOC Signals and Currency Move

The PBOC set the yuan's midpoint at 6.7894 per dollar on Friday, marginally weaker than Thursday's 6.7892, which was the strongest fixing since February 2023. The offshore yuan subsequently extended its rally to 6.7433 by early Friday afternoon, its strongest level since February 2023, according to financial data provider Wind.scmp

Bloomberg reported that the gap between the fixing rate and market expectations was the widest since early March, with some analysts interpreting the stable fixing as an effort by the central bank to temper the pace of gains after the currency's recent climb. The yuan's strength comes amid broad US dollar weakness following the Federal Reserve's decision to hold interest rates steady.roic+1

Politburo Pledge Bolsters Sentiment

The currency move was reinforced by the conclusion on Thursday of a meeting of the Communist Party's 21-member Politburo, which pledged to step up macroeconomic policy support and accelerate fiscal spending for the remainder of the year. The pledge came after second-quarter GDP growth slowed, highlighting a widening gap between strong exports and sluggish domestic demand, according to the South China Morning Post.scmp

The Politburo vowed to "fully leverage the effectiveness of existing policies while promptly rolling out practical and effective incremental measures," according to a statement published by state news agency Xinhua.scmp

"We are bullish on the Chinese yuan as a hedge against war, but potential stimulus is a reason to stay bullish even in peacetime," Abbas Keshvani, Asia macro strategist at RBC Capital Markets Royal Bank of Canada ↗ 0.33%, said on Thursday, pointing to the Politburo's pledge to accelerate fiscal spending amid slowing growth.scmp

Broader Context

The yuan has been one of Asia's best-performing currencies in 2026, strengthening more than 2% against the dollar. Keshvani noted that the Chinese currency had outperformed traditional defensive currencies such as the Singapore dollar, Japanese yen, and Swiss franc since the outbreak of the US-Israel war on Iran, adding that Chinese authorities tend to "marshal the currency through periods of volatility".think.ing+1