Yuan Fix Pattern Spurs Talk of 2019-Style Currency Strategy

The PBOC has so far refrained from using heavy-handed measures to prop up the yuan, which is on course for its biggest annual loss since 1994. Photo: Bloomberg

(Bloomberg) — China’s yuan fixings have steadied over the past week, spurring speculation that the central bank wants to cap currency losses using a method last seen in the U.S.-China trade war in 2019.

The People’s Bank of China set the yuan reference rate near 7.1 per dollar for a seventh session on Thursday, a move that would support the currency around the 7.25 level given a daily 2% trading band. The PBOC had held the fix around a similar level for nearly a month during the trade war, prompting traders to give up on bearish yuan bets.