Lunar New Year: China keeps the yuan steady

As the Lunar New Year holiday emptied financial centers across mainland China, the People’s Bank of China maintained an iron grip on the onshore currency, anchoring daily yuan fixings with remarkable discipline despite the acute legal and trade uncertainty paralyzing Washington.

Fixing Discipline in Legal Limbo

With the US Supreme Court deliberating the legality of the entire tariff architecture, Beijing’s currency strategists recognized that altering foreign exchange policy during judicial deliberations would be a tactical blunder. Devaluing the yuan would provide fuel for emergency legislative tariff alternatives in Congress. Conversely, allowing the currency to appreciate aggressively would inflict unnecessary pain on domestic exporters struggling with soft global demand.

The Anchor of Regional FX

By keeping the onshore yuan firmly tethered, the PBoC provided an essential stability anchor for broader Asian foreign exchange markets. Regional currencies that typically trade as high-beta satellites of the yuan avoided destabilizing speculative attacks. China’s steady hand on the yuan during the Lunar New Year proves that Beijing is playing a patient long game: refusing to offer Washington a pretext for trade escalation while letting American constitutional dysfunction run its course.