Policymakers allow gradual yuan appreciation but resist rapid moves amid weak domestic credit data and softer USD trends.
Chinese policymakers are permitting a measured appreciation of the yuan, with USD/CNH trading near its lowest levels since early 2023. The People’s Bank of China set Friday’s USD/CNY fixing at 6.7878, the weakest since February 2023, though still above market expectations by roughly 430-460 pips.
July’s credit data underscored concerns over sluggish domestic demand. Year-to-date new yuan loans totaled CNY10.38tn, down from CNY12.87tn a year earlier, while aggregate social financing fell to CNY22.25tn from CNY23.9tn. Despite this, exporter conversions, a softer USD, and fixing bias are providing support, with USD/CNH last at 6.7450.
Resistance is seen near 6.7580/6.7730, while support levels hold at 6.74/6.72. Policymakers remain cautious, balancing appreciation against potential economic headwinds.