HONG KONG: China’s yuan touched a 32-month high against the US dollar on Friday and was poised to register its longest winning run in over five years, as investors saw more tolerance from authorities for currency strength. The yuan strengthened to as much as 6.9645 to the dollar, the strongest level since May 2023, before easing the gains to trade 0.03% higher at 6.9660. The currency is now poised for an eighth week of gains, the longest weekly winning streak since 2020, thanks to a string of positive factors including a weaker greenback and increased year-end demand from exporters. Its offshore counterpart traded at 6.9649 yuan per dollar, down about 0.02% in Asian trade. “USD/CNY fixing is on the verge of breaking below 7… and a breach of the psychological 7 level should solidify expectations that PBOC will tolerate gradual RMB gains,” analysts at DBS said in a note on Friday. Still, the pace of appreciation should be limited considering Beijing’s easing bias, they added. China’s central bank announced on Thursday cuts to sector-specific interest rates to provide an early boost to the economy, and signalled it has room this year for further reductions in banks’ cash reserve requirements and for broader rate cuts. Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.0078 per dollar, slightly off the 32-month peak seen in the previous session, and 356 pips weaker than a Reuters ’ estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. The central bank appeared to be engineering a measured appreciation, traders and analysts said. Investors also find more comfort with the yuan strength after the central bank’s deputy governor, Zou Lan, said on Thursday the currency’s strong performance in 2025 was primarily driven by easing US-China trade tensions and a weaker dollar, and reiterated that the PBOC would like to maintain flexibility in the exchange rate. “The change in tone against the backdrop of recent CNY appreciation suggests greater tolerance for further strength,” analysts at Goldman Sachs said in a note.  “Looking ahead, we continue to expect a gradual and choppy CNY appreciation path,” but the pace of appreciation could slow as the FX settlement rush fades, they added. The dollar index, which measures the greenback against a basket of currencies, was little changed at 99.36 on Friday, after positive US economic data lowered expectations for rate cuts by the Federal Reserve anytime soon.