Insights 
VT 
The People’s Bank of China (PBOC) set the USD/CNY central rate at 7.1048 for Friday, shifting slightly from the previous fix of 7.1102. This rate also contrasted with the Reuters estimate of 7.1329.
The PBOC aims to maintain price stability, including exchange rate stability, while promoting economic growth and financial market development. The institution is owned by the People’s Republic of China, with significant influence from the Chinese Communist Party Committee Secretary.
Monetary Policy Tools
China’s central bank employs varied monetary policy tools, including the seven-day Reverse Repo Rate and the Loan Prime Rate, impacting loan and savings interest rates. This rate adjustment can also sway the exchange rate of the Chinese Renminbi.
China allows 19 private banks to operate within the state-driven financial sector. Among the largest are digital lenders WeBank and MYbank, linked to tech giants Tencent and Ant Group.
Various market analyses noted the movements of different currencies, commodities, and cryptocurrencies, with USD, GBP, and gold appearing prominently. Concerns about ongoing US tariffs and their persistent role in foreign policy were also noted.
The People’s Bank of China has set a strong fix for the yuan, signaling its intention to prevent further weakness against a dominant US dollar. This move today, October 10, 2025, is a clear sign that policymakers are actively managing the currency’s value. We see this as an attempt to put a floor under the yuan for the near future.
Global Market Influence
This action comes as recent data showed some softness in the Chinese economy, with September’s industrial production growth of 4.1% year-over-year just missing market expectations. Looking back at the pattern we saw throughout 2024, the PBOC often uses these strong fixes to boost confidence and deter speculative bets against its currency during periods of uncertainty. This is a deliberate move to project stability.
The challenge is that this policy clashes with the broader market trend of a powerful US dollar. The dollar’s strength is fueled by expectations that the Federal Reserve will maintain high interest rates, with US 10-year Treasury yields currently holding firm near 4.8%. This creates a tension between a hawkish Fed and a stability-focused PBOC.
For traders, this suggests the upward momentum in the USD/CNY pair may be limited in the coming weeks. We should consider strategies that bet on a range-bound currency, such as selling out-of-the-money call options on USD/CNH. The conflicting forces could also increase short-term volatility, making options that profit from price swings attractive.
We should also look at currencies linked to China’s economic health, like the Australian dollar. A stable yuan is typically supportive for the AUD, so buying call options on the AUD/USD could be a good proxy trade. This allows for a position on Chinese stability without dealing with the direct interventions in the yuan market.
However, the fact that Gold is trading just below its recent record highs near $4,000 tells us that significant global risk aversion remains. The PBOC’s actions may stabilize one part of the market, but the broader anxiety driven by US policy and geopolitical tensions has not gone away. Any bullish positions should therefore be managed carefully.
