China’s central bank is taking a new approach to its currency. By raising the daily reference rate for the yuan to its highest point in nearly a year, policymakers signal growing confidence in a stronger exchange rate. This move reflects shifting priorities away from previous focus on stability during trade disputes with the U.S., and could boost household purchasing power and domestic demand. Additionally, it offers a counterargument against criticisms that China has kept its currency weak to support exports. However, market tensions remain as uncertainties about U.S. tariffs, interest rate differentials, and ongoing trade negotiations continue. The move underscores confidence in China’s ability to weather external challenges and benefit from domestic demand.