China yuan hits 3-1/2-year high as yen strength weighs on dollar

SHANGHAI: China’s yuan inched higher to a fresh 3-1/2-year high against the dollar on Thursday, aided by a significantly stronger central bank fixing and persistent dollar weakness driven in part by renewed gains in the Japanese yen. The yen held its gains after a sudden, brief surge in the previous session, keeping pressure on the dollar ahead of a crucial US jobs report. Reflecting the broad weakness in the US currency, the People’s Bank of China set the midpoint rate at 6.7807 per dollar before the market opened, its strongest since February 8, 2023, but 640 pips weaker than a Reuters’ estimate of 6.7167. The spot yuan is allowed to trade a maximum of 2% either side of the fixed midpoint each day. Since November 2025, the central bank has consistently set the yuan midpoint weaker than market forecasts, a move analysts and traders see as an effort to anchor currency stability and curb rapid appreciation. In the spot market, the onshore yuan rose to a high of 6.7180 per dollar, the strongest level since February 2, 2023, before changing hands at 6.7183 as of 0328 GMT. Its offshore counterpart fetched 6.7177 yuan per dollar. “The strength in the yuan was reflecting the rebound in t