Chinese Yuan: Steady appreciation backed by PBoC stance – Societe Generale

Societe Generale analysts highlight CNY’s firm trend, with the currency advancing to 6.7424, its strongest level since February 2023, on Dollar weakness and lower US yields. The PBoC reiterates an accommodative stance and targeted support while avoiding explicit rate or RRR cut signals, as 10-year CGB yields fall below 1.70%.

Policy support underpins currency strength

"CNY maintains steady appreciation path: The CNY advanced to 6.7424 today, its strongest level since February 2023, supported by broad-based dollar weakness and lower US yields."

"In its latest quarterly monetary policy implementation report, the PBoC reiterated its commitment to maintaining an appropriately accommodative policy stance and deploying targeted support measures when needed, while stopping short of explicitly signalling policy rate or RRR cuts."

"Chinese bonds continue to demonstrate notable resilience, with the 10y CGB yield falling below 1.70% for the first time in a year after the PBoC’s first mid-month overnight reverse repo (liquidity injection)."

"Separately, the Ministry of Finance successfully sold 50y special sovereign bonds at an average yield of 2.2831%."