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    The PBOC sets the USD/CNY midpoint at 7.1384 today, contrasting with the expected 7.1897.

    by VT Markets
    /
    Aug 20, 2025
    The People’s Bank of China (PBOC) sets the daily midpoint for the yuan (RMB) against the US dollar as part of the managed floating exchange rate system. This system allows the yuan to fluctuate within a specific range of +/- 2% around the central rate. Recently, the PBOC announced the midpoint at 7.1384, compared to an estimated rate of 7.1897.

    Currency Stability and Adjustment

    The last recorded closing rate was 7.1830. This change is an effort by the central bank to keep the currency stable. Today’s midpoint of 7.1384 is a surprising boost, much stronger than the market expected at 7.1897. This clearly shows that the central bank aims to support the yuan and prevent further decline. The adjustment counters the negative sentiment that built up over the summer. This move follows July 2025 economic data, which revealed weaker retail sales and youth unemployment climbing to 21.5%. These factors have been weighing down the currency. Today’s action is likely a direct response to stop the weakening from escalating into a larger issue.

    Impact on Derivative Traders

    We’ve seen similar actions before, especially in the summer of 2023 when the PBOC consistently set strong midpoints to manage depreciation pressures around the 7.30 mark. That time taught us that the central bank doesn’t tolerate rapid, one-sided bets against its currency. History indicates that these strong fixes can last for weeks, countering speculative activity. For derivative traders, this action raises the risk of holding long USD/CNY positions, as you now face a direct challenge from central bank policies. Implied volatility in USD/CNY options will probably increase, making strategies such as selling out-of-the-money call options or setting up bearish call spreads more appealing. These positions benefit from the currency’s struggle to weaken beyond the levels the PBOC is protecting. Create your live VT Markets account and start trading now.

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