The People’s Bank of China (PBOC) has set the USD\/CNY reference rate at 6.9695, compared to the previous day’s value of 6.9678 and a Reuters estimate of 6.710. The PBoC aims to maintain price and exchange rate stability while fostering economic growth and implementing financial reforms.<\/p>\n
China’s central bank employs diverse monetary tools, such as the Reverse Repo Rate, Medium-term Lending Facility, and Reserve Requirement Ratio. The Loan Prime Rate, which affects loan and savings interest rates, is pivotal in this context. Though largely state-owned, China does have 19 private banks, including WeBank and MYbank, principally supported by technology firms Tencent and Ant Group.<\/p>\n
Crypto markets have seen Bitcoin, Ethereum, and Ripple continue their downward trend. Over a week, these cryptocurrencies reported losses of approximately 6%, 3%, and 5%, respectively. Bitcoin is nearing its November low, trading around $80,000, while Ethereum has fallen below $2,800 as pressure mounts.<\/p>\n
The People’s Bank of China has set the daily reference rate for the yuan at 6.9695 against the US dollar, a weaker level than anticipated. This move signals a tolerance for a weaker currency, especially as it deviates significantly from market expectations. Traders should see this as a clear policy signal from Beijing for the weeks ahead.<\/p>\n
This action likely reflects concerns about the domestic economy, as we saw with the Q4 2025 GDP growth figures coming in at 4.8%, below the government’s target. Additionally, the latest Caixin Manufacturing PMI for January 2026, while still expansionary at 50.8, showed a slowdown in new export orders. A weaker yuan can help make Chinese goods more competitive abroad.<\/p>\n
We believe this creates an opportunity to position for further yuan depreciation in the coming weeks. Traders could consider buying call options on the USD\/CNH pair to profit from a potential rise toward the 7.05 level. This strategy offers a defined risk while capturing the upside if the dollar continues to strengthen.<\/p>\n
The significant gap between the official fixing and prior estimates suggests that implied volatility may be underpriced. An increase in currency fluctuations seems likely, making long volatility strategies like straddles on USD\/CNH attractive. This would benefit from larger price swings in either direction, regardless of the ultimate trend.<\/p>\n
We remember the market shock following the surprise devaluation back in August 2015, which triggered significant global risk-off sentiment. While today’s move is far more controlled, it serves as a reminder of how quickly policy can shift. That historical event showed how a managed depreciation can sometimes lead to sharper moves than intended.<\/p>\n
A sustained weakening of the yuan will likely put downward pressure on other Asian currencies, such as the Korean won and the Taiwan dollar. We should also monitor commodities prices, as a weaker yuan can affect China’s purchasing power for raw materials like copper and iron ore. This could create headwinds for the materials sector globally.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" PBOC sets USD\/CNY at 6.9695; crypto markets decline with Bitcoin nearing November low.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40618","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40618","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=40618"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40618\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=40618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=40618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=40618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}