USD/CNY at 6.80 was where they drew the line previously but considering recent economic worries, China is taking another step in trying to bolster domestic conditions. The PBOC has moved to set more easy monetary policy, with more rate cuts today as well, in an effort to strengthen economic support. The weaker yuan that they are setting is also part of that.
But as much as the Chinese central bank is doing their part, they can't do it alone. If demand conditions have drastically collapsed, that is something that needs assistance from the fiscal side in some way or another. There has to be a change in terms of the socioeconomic outlook and it is becoming more evident that start-stop lockdowns are taking a toll on the domestic economy.
In any case, as China paves the way for USD/CNY to potentially target 7.00 next, it just means that we are likely to see a stronger dollar still in the meantime.
