Yen and Yuan Watch: USD/JPY and USD/CNY Daily — 2026-10-10

Top developments

PBoC Releases First Formal Exchange Rate Policy Stance

On October 8, the People's Bank of China (PBoC) published its "Policy Stance on the RMB Exchange Rate," a systematic articulation of its official position for the first time. The document explicitly rejected accusations that China depreciates the yuan to gain trade advantages, arguing instead that the currency's value reflects market supply and demand and manufacturing competitiveness. This move signals a shift toward greater transparency and aims to stabilize expectations ahead of potential trade negotiations with the US.

Yuan Hits Four-Year High Against Basket and Multi-Year High vs Dollar

Following the policy stance release, the yuan advanced to a four-year high against a basket of trading partners' currencies on October 9. Against the US dollar, the onshore spot rate closed at 6.6921, the strongest level since June 2022, driven by strong exports and foreign capital inflows. The PBoC set the daily fixing at 6.7330, significantly stronger than the Reuters projection of 6.7973, indicating a continued desire to guide the currency higher.

Yen Holds Firm Below 158 Amid BoJ Caution

The USD/JPY pair traded below the 158.00 mark in early Asian sessions on October 9, struggling to capitalize on a modest uptick due to a broadly weaker US dollar. Despite the yen's recent appreciation, the carry trade has not fully unwound, with investors still utilizing low-yielding currencies like the CAD and CNY for funding, though the yen remains the primary focus. Market attention remains on whether the Ministry of Finance will intervene again if the yen weakens further, though current levels are below the psychological 160 defense line.

Local view

Chinese financial media highlighted the PBoC's "heavyweight" statement as a definitive rebuttal to international criticism. Sina Finance reported that the policy document is seen as an official "important expression" of China's commitment to a market-based, managed float system, moving away from常态化 (normalized) foreign exchange intervention practices established after 2017. Analysts cited in ChainCatcher noted that the PBoC's explicit denial of competitive devaluation intentions is designed to mitigate trade friction risks while acknowledging that the current yuan strength is supported by fundamental export competitiveness rather than just monetary manipulation.

Context & numbers

• USD/CNY Fixing: Set at 6.7330 on October 9, stronger than the previous day's 6.7367 and significantly below the 6.7973 market projection.
• Onshore Spot Rate: Closed at 6.6921 on October 9, up 93 basis points from the previous session, marking the highest level since June 29, 2022.
• USD/JPY: Traded near the lower end of its daily range, below 158.00, as the greenback retreated from recent highs.
• Valuation Debate: MUFG analysts noted BIS Real Effective Exchange Rate (REER) data shows a 20% fall from the 2022 peak, while IMF estimates suggest the yuan may be 12–20% undervalued, a claim the PBoC's new document directly contests.

On the radar

• Trump-Xi Summit: The PBoC's strengthening of the yuan fixing is viewed as a preparatory move ahead of the upcoming summit between President Xi Jinping and former President Donald Trump, aiming to offset dollar gains and present a stable currency front.
• Carry Trade Flows: Investors are monitoring if the yen's appreciation will continue to push carry-trade seekers toward other low-yield currencies, potentially impacting global liquidity conditions.