The Chinese yuan rose to its strongest level against the US dollar in more than three years, reaching about 6.75 per dollar on July 30-31, 2026, its highest since February 2023 [1, 2, 3]. The onshore yuan traded near 6.7484-6.7551 per dollar, while the offshore yuan hovered around 6.7465-6.7530 during that period [1, 2, 3].
The rally was underpinned by broad US dollar weakness after the US Federal Reserve held interest rates steady at 3.5%-3.75% in late July 2026, reducing upward pressure on the greenback [2, 3]. Despite the gains, the People's Bank of China (PBOC) set the daily yuan midpoint fixing at 6.7894 per dollar on July 31, slightly weaker than market expectations. Analysts noted this as a clear sign from the PBOC signaling discomfort with the rapid yuan appreciation [1, 2]. Wee Khoon Chong, senior Asia Pacific market strategist at BNY, said, "PBOC sends its strongest signal yet against rapid yuan gains and policymakers are likely increasingly uncomfortable with the pace of appreciation" [2].
While the yuan strengthened roughly 0.6% against the US dollar in July 2026 and posted a year-to-date gain of about 3.6% by the end of the month [1, 2], the PBOC's midpoint fixings helped temper the pace of the rally. On July 31, month-end flows favored dollar selling in onshore markets, while state banks actively bid for dollars, slowing the yuan's gains [2].
Market projections from Barclays and LGT Bank suggest the yuan could strengthen further to a range of about 6.65-6.60 per US dollar by the end of 2026 or within the next 12 months [2]. The yuan's onshore and offshore highs around July 30-31 mark a significant milestone since its last peak in early 2023.
The PBOC and market participants will monitor these exchange rate moves closely as they manage the balance between supporting the yuan and curbing excessive appreciation. The next key reference point will be the yuan's performance in August and the PBOC's daily fixings in the weeks ahead.
