China’s central bank is taking steps to restrain the yuan’s rally while stopping short of encouraging declines, in a sign that officials are willing to tolerate some currency strength.
After scrapping on Saturday a two-year rule that made it expensive to bet against the yuan, the People’s Bank of China on Monday set its daily reference rate only slightly weaker than analysts expected. While the moves triggered a 0.6% slide in the yuan in early trading, the currency has still risen 4.2% in the past three months.
Analysts said the moves would reduce one-way bets on the yuan, slowing a rapid ascent that had pushed it to its strongest since April 2019 against the dollar. The yuan surged about 1.6% on Friday when the currency traded for the first time this month following National Day holidays, extending its best quarterly advance in 12 years.