China halts yuan rally as rate outlooks shift markets
China moved to curb rapid yuan gains by scrapping risk reserves on Friday. The Australian dollar led G10 gains while the yen struggled with political shifts.
Currency markets in Singapore and across Asia experienced a significant shift in February as central bank interventions and evolving interest rate expectations recalibrated global valuations. While China moved to halt a prolonged rally in its currency, Australia emerged as a leader among G10 nations due to a resilient domestic economy.
The People's Bank of China acted to curb the rapid appreciation of the yuan by scrapping foreign exchange risk reserves for specific forward contracts, a move designed to encourage dollar buying. This intervention, combined with a weaker-than-anticipated midpoint fix, caused the onshore yuan to drop 0.2% to 6.8553 per dollar, effectively ending a 10-day streak of gains. Despite this dip, the currency has maintained a gain of approximately 2% for the year following a strong performance in 2025.
