China’s central bank sets daily yuan rate against US dollar at strongest level in a year

China’s central bank has set the yuan’s daily reference rate against the US dollar at the strongest level in a year, as expectations grow that the US Federal Reserve will cut rates again this month.

On Thursday, the People’s Bank of China (PBOC) set the yuan’s midpoint rate – also known as the daily fixing rate – at 7.0968 per US dollar, its strongest since October last year.

Two days earlier, US Federal Reserve Chairman Jerome Powell said that America’s labour market and inflation outlooks were little changed from last month, when the Fed lowered its benchmark interest rate. His remarks reinforced market expectations of another rate cut later this month.

Stephen Miran, a member of the Fed’s board of governors, said at a forum organised by CNBC on Wednesday that the uncertainty surrounding US-China trade tensions had added risks to the US economic outlook, making the case for rate cuts more urgent.

The market is anticipating two more Fed rate cuts this year, after the US central bank delivered a 0.25-percentage-point cut last month – the first this year.

The offshore yuan edged down to 7.129 per US dollar at midday on Thursday, after climbing as high as 7.121 following the fixing. The currency also strengthened on Wednesday, when the PBOC set the rate at its strongest level since November.

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