PBoC Defends FX Policy as Data Shows Chinese Yuan Undervalued

The People’s Bank of China (PBoC) has issued a document defending its foreign exchange policy, addressing concerns about the Chinese yuan’s role in trade imbalances. According to FX Street, the PBoC rejects claims that the yuan, or CNY, is deliberately used to drive China’s trade surplus.

Data from the Bank for International Settlements (BIS) indicates that the yuan’s real effective exchange rate has fallen by 20% from its 2022 peak, suggesting significant depreciation. Meanwhile, the International Monetary Fund (IMF) estimates the CNY is undervalued by 12–20%, reinforcing views that China’s currency remains competitively priced in global markets.

As noted by MUFG’s Halpenny and reported by FX Street, these findings highlight ongoing debates around China's currency valuation, which are closely watched by Japanese investors given the impact on regional trade and FX markets.