Two decades after China began allowing its currency to fluctuate, authorities are again standing in the way of an appreciation. It’s a reminder that the decision in 2005 to sever the yuan’s hard peg to the dollar, important as it was, came with strings attached.
While Beijing never walked away from the foreign-exchange market, recent interventions are noteworthy. They suggest a desire to preserve exports made more competitive by a weak currency and a worry that the domestic economy is softer than official growth numbers suggest. The problem is that this situation is unlikely to cure itself. Exports rose more than forecast in November, according to recently released figures and the trade surplus exceeded $1 trillion for the first time. A raft of data, by contrast, was projected to point to a lackluster domestic picture.
Not that the yuan has suffered in 2025. Just recently, it was up almost 4% against the dollar and on course for the best annual performance in five years. But these gains are middling, considering the greenback is having a less-than-stellar time. The Malaysian ringgit, Thai baht and Singapore and Taiwan dollars have done much better. Investors want to take the yuan higher, but keep encountering resistance from the People’s Bank of China.
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