China sets yuan midpoint 633 pips below estimate, largest deviation since February 27

Beijing just pulled the handbrake on one of the strongest currency rallies in Asia this year. On August 25, the People’s Bank of China set its daily yuan midpoint at 6.7852 per dollar, landing 633 pips below the Reuters consensus estimate. That gap is the widest weak-side deviation since February 27, when the PBOC went even further with an 800-pip surprise. The timing matters. The yuan has been on a tear in 2026, posting year-to-date gains of roughly 4% and recently touching 3.5-year highs against the dollar. How yuan fixing actually works China doesn’t let its currency float freely like the dollar or euro. Instead, the PBOC sets a daily reference rate, called the midpoint, each morning before onshore trading begins. The onshore spot yuan can then trade within a band of plus or minus 2% around that fixed point. Reuters polls a panel of market participants each day to produce a consensus estimate for the fix. The gap between that estimate and the actual fix is how analysts gauge the PBOC’s intent. A pattern emerges since July This isn’t an isolated move. Since late July 2026, the PBOC has established a visible pattern of fixing the midpoint well below market expectations. Prior devi...