Offshore yuan remains firm after PBoC decision

The offshore yuan held steady to around 7.04 per dollar, hovering near a fourteen-month high, as investors assessed the People’s Bank of China’s decision to keep loan prime rates unchanged.

The central bank kept its one-year LPR at 3.0% and the five-year at 3.5%, holding both at record lows for the seventh consecutive month in December.

The PBoC also left the seven-day reverse repo rate at 1.4%, signaling less urgency for additional monetary stimulus as the economy is on track to meet this year’s growth target.

The decision came after last week’s data showed that retail sales and industrial output growth in November eased amid lingering property sector crises.

Meanwhile, the yuan has been appreciating at a measured pace since April, guided by the central bank through reference rates to curb carry-trade benefits and protect exporters from sudden currency swings.

At this pace, it is projected to reach 7 per USD by March and finish 2026 around 6.8–6.9 if interest rates stay unchanged.