The Chinese currency, the renminbi (RMB), has demonstrated significant strength, reaching its highest valuation against the US dollar in several months. This notable appreciation is drawing attention from global financial markets and policymakers.
Yuan Breaks Through Key Psychological Barriers
On Thursday, the Chinese yuan achieved a major milestone. The onshore rate broke through the level of 7.01 yuan per US dollar, while the offshore rate surpassed 7 yuan per dollar. This marks the strongest position for the currency since September 2024, indicating a robust upward trend.
Official data from the China Foreign Exchange Trade System confirmed the momentum. The central parity rate was set at 7.0392, strengthening by 79 pips against the greenback in a single day. The cumulative gains since the start of the year are even more impressive, showcasing sustained appreciation.
Sustained Appreciation and Central Bank Stance
The rally is not a one-day event but part of a broader trend for 2025. According to wire service reports, the offshore RMB has appreciated by 4.6 percent against the US dollar since January. Similarly, the onshore exchange rate has seen a solid 4 percent gain over the same period.
The People's Bank of China (PBOC) has acknowledged this movement. In a statement released on Wednesday following its fourth quarterly meeting of 2025, the central bank's Monetary Policy Committee noted that supply and demand in the forex market are basically in equilibrium. It also stated that China's foreign exchange reserves remain adequate.
PBOC Commits to Market Stability
The central bank emphasized its role in ensuring orderly market conditions. The PBOC's assessment is that the RMB exchange rate has moved in both directions and remained basically stable at what it terms an "adaptive and equilibrium level."
Looking forward, the bank outlined its policy priorities. The PBOC stated it will enhance the resilience of the foreign exchange market and stabilize market expectations. A key objective is to guard against the risk of exchange rate overshooting. The ultimate goal is to maintain the RMB's stability at that adaptive and equilibrium level, suggesting a managed approach to the currency's value amidst global economic fluctuations.
This development in the RMB exchange rate is a critical indicator for international trade and finance, affecting everything from import costs to regional currency benchmarks. The People's Bank of China's proactive stance highlights its focus on preventing excessive volatility while allowing the market to reflect fundamental strengths.
