Yuan Central Parity Rate Rises for Third Straight Day to 6.7808 as U.S. Treasury Move Triggers Dollar Plunge

On August 20, the yuan's central parity rate against the dollar was set at 6.7808, up 46 basis points from the previous trading day, marking a third consecutive daily rise with a cumulative increase of 102 basis points, the highest level since February 8, 2023. Market reports indicate that actions by the U.S. Treasury Department were the main catalyst for the dollar's rapid decline.

**Central Parity Rate Rises Consecutively, Moving Away from Short-Term Correction**

Reviewing recent trends, after a brief 32-basis-point depreciation on August 18, the central parity rate has risen sharply for three consecutive days starting August 19, quickly moving out of its adjustment range. This performance reflects increasingly positive market expectations for the yuan amid a broadly weaker dollar. Previously, the dollar index had weakened for four consecutive trading days, once falling to around 99.655, providing external conditions for the yuan's strength.

**Dollar Under Pressure, Yuan Spot Rate Moves Higher**

Affected by U.S. Treasury developments, selling pressure on the dollar has intensified. As of press time, the offshore yuan traded around 6.7233 against the dollar, further strengthening from the central parity level. This indicates that on top of the official guidance rate hike, market trading forces are pushing the yuan toward a stronger direction. However, market participants also noted that attention should be paid to upcoming U.S. economic data and Federal Reserve policy signals, as the dollar index's short-term trajectory remains uncertain.

**Outlook: Focus on Policy Interaction and Market Pace**

Some analysts believe that the yuan's current strength is closely tied to the dollar's passive weakness, and whether it can continue to break through key levels will depend on Sino-U.S. policy interaction and shifts in global risk appetite. Notably, regulators have previously conveyed stability signals through measures such as adjusting derivatives market fees, indicating their vigilance over one-sided exchange rate movements. Overall, the yuan is likely to remain firm in the short term but with potentially greater volatility.