China’s central bank is using its daily yuan reference rate to curb the
currency’s rally as its recent outperformance during the Iran war boosts bullish
sentiment. Volatility in the People’s Bank of China’s fixing has dropped to the
lowest since early March, signaling efforts to limit fluctuations within the 2%
trading band. The yuan’s strength, driven by resilience to energy shocks, has
prompted pushback against one-way bets that could hurt exports. Analysts say the
PBOC has shifted to a neutral stance, aiming to prevent overly rapid
appreciation while stabilizing FX markets.
