China lifts yuan fix by most in 5 months despite recent exchange rate appreciation

The People's Bank of China (PBOC) on Wednesday lifted its official yuan midpoint the most in five months to the strongest level since May 2019, according to Reuters. 

The central bank raised the midpoint rate by 397 pips to 6.7825 per US dollar – the highest level since May 9, 2019 – from Tuesday's fix of 6.8222. it is the biggest single-day percentage gain since April 8, 2020. 

The PBOC's decision to lift the yuan fix looks perplexing, given the currency is already in a strong uptrend. 

The yuan is currently trading at 6.77 per US dollar – up 5.5% from the low of 7.1766 observed in May. The currency has appreciated by 4% this quarter.