People's Bank of China, also known as China's Central Bank in Beijing. China's bid to tighten liquidity while most central banks worldwide are battling to boost cash flows underlines the Asian giant's status as largely immune from the troubles afflicting global markets. AFP PHOTO/TEH ENG KOON (Photo credit should read TEH ENG KOON/AFP via Getty Images)
Hong Kong, China (EPICSTORIAN) – China’s central bank has kept the yuan stronger than expected against the US dollar, signaling that it won’t use currency devaluation to offset the latest round of US tariffs.
The People’s Bank of China (PBOC) set the yuan’s midpoint rate at 7.1693 per dollar, slightly stronger than the 7.1698 rate from late January.
This rate serves as a key benchmark for onshore yuan trading, restricting fluctuations to 2% above or below the set value each day.
Market analysts had widely anticipated a weaker yuan in 2025, believing that a lower exchange rate could help Chinese exporters absorb the impact of Washington’s new 10% tariff hike, which took effect on Tuesday.
China’s Currency Strategy and US Trade Talks
By keeping the yuan stable, Beijing appears to be signaling confidence in its economic position rather than engaging in currency-driven retaliation.
Ding Shuang, Chief Greater China Economist at Standard Chartered Bank, highlighted this shift. “The stronger-than-expected fixing rate suggests China is not looking to counter US tariffs through yuan depreciation,” he said.
A stable yuan may also support ongoing diplomatic efforts. “Trade negotiations between China and the US haven’t begun. Setting a strong fixing rate could help maintain a favorable environment, as Washington does not want the yuan to lose value too quickly,” Ding added.
The US has long accused China of manipulating its currency, with previous administrations threatening economic penalties.
According to experts, a sharp devaluation now could further strain relations, potentially leading to harsher retaliatory measures. Rather than risk financial volatility, China seems to be prioritizing market stability and a cautious response to trade pressures.
