China's yuan hovers near 3-1/2-year peak, set for 8th straight weekly rise

China's yuan held close to its highest level in about three and a half years on Friday, according to Business Recorder, with the onshore rate at 6.7221 per dollar in early Asian trading. The currency had touched 6.7203 a day earlier, its strongest point since February 2023, and was on course for an eighth consecutive weekly advance. The dollar itself was heading for a weekly decline as traders weighed the US Treasury's bond buyback scheme as a stopgap.

The People's Bank of China set its daily midpoint at 6.7817 per dollar, which was 555 pips weaker than a Reuters estimate of 6.7262. Such weaker-than-expected fixings have been applied since November 2025, a pattern the market reads as an effort to curb excessive gains. OCBC Bank strategist Christopher Wong said the approach favours gradual rather than rapid appreciation, while still seeing room for yuan strength.

Currency traders are now looking ahead to a speech by Fed Chairman Kevin Warsh at the Jackson Hole symposium next week, seeking indications of how the central bank intends to deal with inflation that remains high.