Yuan Central Parity Rate Lowered by 32 Basis Points, US-Iran Situation Turns "Fully Offensive"

On August 18, the central parity rate of the yuan against the US dollar was set at 6.7905, a notable downward adjustment of 32 basis points from the previous trading day, ending a two-day streak of modest appreciation and hitting a two-week low since August 4. This adjustment is one of the more significant moves within the recent narrow fluctuation range, indicating a phased loosening of the reference rate amid external geopolitical sentiment disruptions.

Looking at recent trends, the central parity rate had maintained an extremely narrow sideways consolidation between 6.7870 and 6.7900. On August 14 and 17, the rate was adjusted upward by only 10 and 5 basis points, respectively, reflecting strong stabilization intentions. However, on August 18, the rate directly broke below the 6.79 threshold, interrupting this steady rhythm. Market reports indicate that the US-Iran situation has shifted to a "fully offensive" tense stance, boosting global risk-aversion sentiment and lifting demand for the US dollar, which has exerted short-term pressure on non-US currencies, including the yuan.

Despite the notable downward adjustment in the central parity rate, the offshore yuan spot price has shown some resilience. As of press time, the dollar-offshore yuan pair was trading around 6.7469, forming a clear spread from the central parity rate and remaining well below that level. This suggests that while the official guidance rate has been adjusted in response to external uncertainties, there has been no panic selling of the yuan in the physical market, and market expectations for the medium-term trajectory remain relatively calm. Going forward, close attention should be paid to whether the evolution of the US-Iran situation will have a substantive impact on cross-border capital flows.