Chinese yuan exchange rate climbs to a nine-month peak following a softening monetary stance by the US Federal Reserve chairman

Central Bank of China's action follows Jerome Powell's hint at potential interest rate reduction in the forthcoming month.

, and Administrator

2025 September 5 . 4:18 PM

2 min read

Yuan Fixing Rate in China Reaches 9-month Peak following Dovish Shift by US Fed Chair

Chinese yuan exchange rate climbs to a nine-month peak following a softening monetary stance by the US Federal Reserve chairman

The Chinese currency, the yuan, experienced its largest upwards adjustment since January, marking a significant shift in its value. This development comes after the People's Bank of China set the yuan's midpoint rate against the US dollar at its strongest level in more than nine months on Monday, August 25, 2025.

The strong showing of the yuan's daily reference rate, which was last seen in early November, is a reflection of growing bets on rate cuts by the Federal Reserve. These bets have been fueled by the dovish pivot taken by Federal Reserve Chair Jerome Powell.

Powell's dovish stance, evident in his remarks at the Federal Reserve's annual Jackson Hole conference on Friday, has contributed to a fall in the US dollar index to a four-week low. Following Powell's remarks, the offshore yuan climbed to 7.158 per US dollar by midday on Monday, its strongest level since late July.

Raymond Yeung, chief economist for Greater China at ANZ, stated that the market has "almost locked in" a rate cut by the Federal Reserve in September. According to Yeung, the focus is now on the scale and pace of easing this year and across the cycle.

The yuan's midpoint rate, also known as the daily fixing rate, was set at 7.1161 per US dollar on Monday. The adjustment in the yuan's midpoint rate was likely made in response to expectations of rate cuts by the Federal Reserve.

This strengthening of the yuan is a notable event in the financial world, indicating a shift in the global economic landscape as the Federal Reserve prepares for potential interest rate cuts. The impact of these rate cuts, both on the US and global economies, remains to be seen.