SHANGHAI (Reuters) – China’s central bank set the yuan’s peg at the widest gap to a Reuters estimate in nearly five months, as authorities step up efforts to prevent sharp declines in the currency.
Before the market opened, the People’s Bank of China (PBOC) set the average rate at 7.0948 per US dollar, around which the yuan can trade in a 2% range.
The fix came in 1,311 pips higher than the Reuters estimate of 7.2259, the widest gap since November 2023.
The yuan fell to four-month lows last Friday and the PBOC continued to set a stronger-than-expected peg rate to support the currency.
“We expect the PBOC to guard against further CNY weakness for now and tone down any sharp jumps after seeing the market reaction last Friday,” said Alex Loo, macro strategist at TD Securities.