China's yuan rebounded sharply against the U.S. dollar on Tuesday after the People's Bank of China strengthened its official midpoint rate by 0.21 percent, marking the largest one-day gain since August. The central bank's move signals an attempt to stabilize markets amid Middle East geopolitical tensions and recent currency volatility. Onshore yuan traded at 6.8845 per dollar, up 0.3 percent, while offshore yuan gained similarly. Analysts note the PBOC is using the midpoint as a policy tool to anchor market expectations and prevent excessive yuan appreciation, which could hurt exporters. The central bank previously eliminated reserve requirements for forward currency contracts to encourage dollar buying. Despite recent strength, the yuan remains cautious of rapid appreciation that could complicate domestic economic rebalancing.
