China’s central bank rejects the claim that the yuan is undervalued as the offshore rate hits its strongest since 2022

The People’s Bank of China issued a policy paper rejecting claims that the yuan is undervalued, arguing that China’s export performance stems from factors the excerpt does not finish listing². People’s Daily reported that the central bank issued a comprehensive statement clarifying its official stance on the currency’s trajectory³. Both are the bank’s own account of its intentions rather than independent confirmation of them.

Trading Economics reported the offshore yuan at its strongest since 2022, rising as the central bank defended its policy and supported the currency⁴. For Monday’s session the bank set the USD/CNY central parity at 6.7313, firmer than Friday’s 6.7330 and above a Reuters estimate the excerpt cuts off⁵.

Trading Economics also reported the offshore yuan rising as the bank defended its policy, and noted that the central bank set the rate in a sentence the excerpt cuts off⁴.

Why it matters to investors

The Wall Street Journal reported that the PBOC is expected to tolerate further gradual yuan appreciation, citing a Barclays research note¹. A stronger renminbi squeezes the margins of Chinese exporters and lifts the dollar value of Chinese assets at the same time, which is why the bank’s tolerance, rather than its rhetoric, is the number traders watch.

The timing is the point. The bank issued its statement ahead of EU-China negotiations in which the exchange-rate imbalance is a focus^2,6. Publishing a defence of the currency’s level before a trade negotiation is a bargaining position as much as an economic argument.

The bank’s case is that the currency’s level reflects export performance rather than management, an argument it set out in the paper itself². People’s Daily dates the statement to the eighth of a month the excerpt does not name and calls it comprehensive³; what is visible is the claim, not the evidence for it.

What to watch

First, the daily fixing. The bank set a firmer parity on Monday while signalling near-term tolerance for the renminbi trading band⁵, so each day’s number is a readable signal of how far Beijing will let the currency run.

Second, the rest of Asia, where currencies have diverged as a Treasury rally dents the dollar while AI-driven exports underpin Taiwan and Korea, and where attention is also on the EU-China talks and the central bank’s stance⁶. Third, whether the European side accepts the argument, since so far only Beijing has made it^2,3.