The highest body within the Communist Party of China, the Politburo, aims to maintain the Yuan's exchange rate balanced.

The exchange rate of the US Dollar fell approximately 0.5% against the Chinese Yuan on Tuesday (July 25), with USD/CNY reaching 7.1510. Reuters reported that Chinese state-owned banks launched selling actions of the US Dollar in both the offshore and onshore spot markets at the beginning of the Asian session to support the Yuan's exchange rate.

On Monday, the Politburo meeting - the highest policy-making body within the Communist Party of China - released a series of proposals to support the economy amid the challenges of post-pandemic recovery. Xinhua news agency reported that they will focus on boosting domestic demand and implementing more stimulus measures.

China will implement macro policy adjustments "precisely and decisively" and strengthen counter-cyclical adjustments. At the same time, the government will adhere to the principles of cautious monetary policy and proactive fiscal policy.

They also said they would balance the Yuan's exchange rate, revitalize the capital market, and restore investor confidence. Following this statement, Chinese state-owned banks took action today by selling US Dollars.

"It is interesting that the Politburo mentioned FX stability in the statement, for the first time in recent years," analysts at HSBC said in a note.

"This means that smoothing yuan depreciation pressure may become more of a policy priority from now on. This is in line with the People's Bank of China's (PBOC) further tightening of FX policy recently."

Recently, Chinese authorities have been implementing various strategies to boost the value of the Yuan, which has weakened since the beginning of the year. Last week, the Chinese government allowed companies to borrow more money from overseas.

Additionally, the PBoC (People's Bank of China) has repeatedly set the daily reference exchange rate of the Yuan higher than market expectations.

The Yuan's exchange rate is not included in the US Dollar Index (DXY) components, so China's actions do not directly impact the index. Nevertheless, the assertiveness of Chinese officials has improved market sentiment and boosted the value of several high-risk currencies. AUD/USD and NZD/USD have slightly increased over the past two days after experiencing a decline throughout the previous week.