Reuters sees PBOC USD/CNY fix at 6.7025

China will be closed for a week of holidays beginning Thursday, October 1, 2026.

At the moment, the daily fix deserves special attention because its message has shifted over the past month. For close to a year, the PBOC has placed its midpoint lower than market forecasts, a stance traders read as an effort to curb the yuan’s appreciation; in late August the gap was its widest since February, shortly after the currency hit a three-and-a-half-year high. Through September, though, the fix has strengthened faster, narrowing the distance from market projections and suggesting the central bank is less resistant to yuan gains. The midpoint still comes in weaker than model-based estimates, so the change looks like a loosening of the brakes rather than a full release. Beijing’s underlying calculation is unchanged: a firmer yuan helps keep capital stable and brings down import costs, but a too-rapid rise could erode exporters’ edge while the domestic economy remains soft. The spread between each day’s fix and consensus forecasts stays one of the clearest signals of how far the PBOC is willing to let the yuan go.

Beijing’s least conspicuous and most direct channel for signalling the yuan’s desired pace is the daily fix, and after urging markets to slow down for months, it is now asking for gradual progress.

Summary:

• Each day at about 0115 GMT, the PBOC publishes the USD/CNY reference rate, or midpoint, one of the most-watched indicators in Asian FX markets.
• China runs a managed floating exchange rate regime, which lets the yuan trade in a band of plus or minus 2% around the daily midpoint during onshore hours.
• The midpoint is based on several inputs, including the prior session’s close, major currency moves, broader global FX conditions and domestic factors such as capital flows and growth momentum; policymakers keep discretion over the final number.
• If the yuan is pushed toward either boundary of the band, the PBOC can intervene by buying or selling the currency, adjusting liquidity, or guiding via state-owned banks.
• A stronger-than-expected fix usually means the PBOC is leaning against depreciation, while a weaker fix can indicate tolerance of a softer currency or concern about the pace of gains.
• The fix has been below market estimates for nearly a year, with the widest gap since February seen in late August.
• The PBOC raised the fix for eight straight sessions in September, the longest such run since 2023, and the midpoint has since reached its strongest since February 2023.
• The yuan has hit its strongest levels since early 2023 onshore and since mid-2022 offshore, with Goldman Sachs expecting Beijing to stay comfortable with steady but measured appreciation.

Around 0115 GMT each session, the PBOC publishes the USD/CNY reference rate, a figure that stays among the most closely watched in Asia’s foreign-exchange markets. In recent weeks, the fixing has gained extra significance because officials have shifted from curbing the yuan’s strength to steering it higher.

The yuan trades under a managed float, free to move within plus or minus 2% of the midpoint set on each trading day. The fix blends a range of inputs, including the previous close, moves in currencies such as the dollar, the broader international FX backdrop, and domestic factors like capital flows, growth momentum and financial-stability goals. The formula is not purely mechanical, which gives policymakers room to use the midpoint as a guide for market expectations.

Once the midpoint is out, onshore USD/CNY can move freely within the permitted range. If market pressure carries the currency to either edge of the band, the PBOC can step in to smooth volatility through direct yuan trades, liquidity measures, or messages relayed by state-owned banks. As a result, the daily fixing is treated as a policy signal rather than a mere technical reference. A midpoint above expectations typically indicates the PBOC is guarding against depreciation, whereas a weaker fix can point to tolerance for a softer exchange rate or unease with the speed of gains.

That second reading dominated for most of the past year. For almost a year, the PBOC set its daily midpoint below market expectations, a pattern that traders and analysts saw as a deliberate effort to slow the yuan’s rise. The gap was at its widest since February in late August, right after the yuan touched a three-and-a-half-year high against the dollar.

September brought a decisive shift in tone. The midpoint has strengthened at a faster pace this month, narrowing the shortfall versus market forecasts and indicating that the PBOC has softened its opposition to yuan gains. The central bank delivered eight consecutive stronger fixes, the longest streak since 2023, and the midpoint has since climbed to its highest since February 2023. Onshore, the yuan is trading at its strongest since January 2023; offshore, it has reached levels last seen in July 2022. Even so, the fix is still set far below market estimates, with one recent midpoint more than 500 pips weaker than a Reuters survey projection — a sign that Beijing is permitting appreciation on its own terms rather than stepping out of the way.

The timing has been tied to diplomatic considerations. Goldman Sachs analysts noted that firmer fixes ahead of the Trump-Xi summit are consistent with past behaviour, and they said policymakers should remain comfortable allowing the yuan to keep appreciating gradually.

The underlying dilemma is a familiar one. A stronger yuan supports capital stability and lowers import costs, but a fast ascent risks hurting export competitiveness while China’s broader economy remains weak. For traders and investors, the gap between each day’s fixing and consensus estimates is still one of the clearest ways to judge how Beijing is weighing that trade-off, and whether the recent green light for gains will remain once the summit is over.