Beijing signals determination to defend currency after offshore yuan tumbles to record low
China’s central bank sets midpoint rate at 7.2066 per US dollar ahead of imposition of even steeper US tariffs
Beijing lowered the yuan’s daily reference rate only slightly on Wednesday, despite the offshore yuan hitting a record low overnight, signalling China’s determination to stabilise its currency amid an ever-escalating trade war with the United States.
Just hours before the second Trump administration was due to increase its additional tariffs on all US imports from China to 104 per cent – taking the total US duty level on China to around 115 per cent – the People’s Bank of China (PBOC) allowed the yuan to further weaken against the US dollar, setting its daily fixing rate – also known as the midpoint rate – at 7.2066 per US dollar.
On Tuesday it set the rate at 7.2038, marking the first time the yuan had fallen below the psychologically significant 7.2 threshold since September 2023.
“Facing the current tariff pressures, the central bank has widened the yuan’s trading band to fully acknowledge the stress in the foreign exchange market, while sending a clear signal of its determination to defend the currency’s stability – this policy stance leaves no room for speculation against the yuan,” Wang said.
The central bank’s intention was to guide sentiment, reassure markets and maintain control, rather than helping exporters to continue selling their products to the US, she added.
“The PBOC will seek to stabilise, not devalue, currency amid a trade war,” Wang said.