BEIJING, Sept. 22, 2025 – The Chinese yuan (renminbi) strengthened on Monday after the China Foreign Exchange Trade System (CFETS) set the central parity rate at 7.1106 per U.S. dollar, up 22 pips from the previous fixing.
The central parity rate, often called the daily reference or “fix,” is announced by CFETS under the supervision of the People’s Bank of China (PBoC). It is based on a weighted average of rates submitted by market makers before the interbank market opens, excluding the highest and lowest quotes. The parity serves as the anchor for trading in the onshore market.
China’s spot foreign exchange market allows the yuan to move within a 2 per cent band above or below the central parity each day. This managed float system gives the currency flexibility while enabling the central bank to limit volatility.
Analysts say the firmer yuan reflects several factors. Domestically, the PBoC has maintained a cautious monetary stance, resisting aggressive easing despite pressure to stimulate growth. Globally, expectations of softer U.S. interest rates have weighed on the dollar, contributing to a tighter USD/CNY parity. Stronger trade and capital flows into China are also supporting the yuan.
A stronger yuan can help lower the cost of imports and ease inflationary pressures within China. However, it can also make Chinese exports less competitive abroad, posing a challenge for manufacturers and policymakers seeking to balance growth with stability.
Internationally, currency watchers are monitoring China’s daily fixings closely. Recent adjustments suggest authorities are nudging the yuan toward modest strength, a move seen as a vote of confidence in the country’s recovery. At the same time, the exchange rate has broader geopolitical significance, as shifts in the yuan affect global trade and capital markets.
The 7.1106 fixing highlights Beijing’s continued management of the yuan under its market-based yet controlled regime, with investors looking to the next parity announcements for signs of direction. GMTNewsng
