Beijing has set the yuan at its
strongest level against the US dollar since early 2023, with banks projecting
further appreciation
·
The
offshore yuan strengthened to around 6.803 per US dollar
following the fixing.
·
The
Chinese currency has been gradually appreciating since early 2025 due to:
o strong exports,
o weakening US dollar,
o improving producer prices,
o and policy support for currency stability.
·
Bank
of America forecast the yuan to strengthen to 6.70/USD by
end-2026.
·
Bank
of America said easing geopolitical tensions and stable US-China relations
after the Trump–Xi summit support yuan appreciation.
·
UBS
Investment Bank described the yuan as a “structurally undervalued currency”
with potential for another 3–4% gain.
·
UBS
highlighted:
o strong external balances,
o stabilising domestic activity,
o cheap currency valuation,
o and rising producer prices as key
positives.
·
China’s
producer price index (PPI) reportedly increased 2.8%
year-on-year last month, indicating possible exit from
deflation.
·
Goldman
Sachs raised its yuan forecasts to:
o 6.80/USD in 3 months,
o 6.70 in 6 months,
o 6.50 in 12 months.
·
Goldman
Sachs said China’s recent fixing behaviour signals support for a “gradual but
sustained” yuan appreciation trend.
·
Analysts
believe Beijing is allowing moderate yuan strengthening to:
o support yuan internationalisation,
o reduce imported inflation,
o and maintain foreign exchange stability.
·
Despite
optimism, concerns remain over:
o weak domestic demand,
o export dependence,
o and risks from global geopolitical
tensions.
[ABS News Service/21.05.2026]
China’s
central bank has set the yuan’s daily reference rate against the US dollar at its
strongest level in more than three years, as global banks turn increasingly bullish
on the Chinese currency.
The
People’s Bank of China set the yuan’s midpoint rate, also known as the daily fixing
rate, at 6.8349 to the US dollar on Thursday – the strongest showing since February
2023.
The
move followed a 0.22 per cent appreciation in the offshore yuan on Wednesday, after
bouts of volatility over the past week. As of early afternoon on Thursday, the offshore
yuan was trading at 6.803 per US dollar.
The
yuan has been gradually appreciating in value since early last year – despite occasional
fluctuations – buoyed by China’s resilient exports and a weakening US dollar. Several
global banks have recently projected further gains for the Chinese currency.
Bank
of America said in a note on Wednesday that it predicted the yuan to strengthen
to 6.70 per US dollar by the end of this year, which it said was premised on “a
resolution of the Iran conflict and China’s preference for FX [foreign exchange]
stability in times of global stress”.
The
report said last week’s summit between US President Donald Trump and Chinese
President Xi Jinping – which appeared to pass without major incident – signalled
“a stabilisation of relations and opens the door to some goodwill yuan appreciation”.
“The
issue, however, is that China’s domestic economy remains weak and overly
reliant on exports,” the bank added.
“Still,
China can afford some modest appreciation to blunt imported inflation, support
yuan internationalisation and placate FX valuation concerns.”
Rohit
Arora, head of Asia FX and rates strategy at UBS Investment Bank, said earlier this
month that he viewed the yuan as a “structurally undervalued currency with strong
external balances and policy support for gradual appreciation”.
“I’m
most bullish on the Chinese yuan and Australian dollar, backed by strong fundamentals
and policy support,” the analyst said.
Arora
added that the yuan was one of the bank’s top trade recommendations for the year,
with potential to make another 3 per cent to 4 per cent of further gains against
the US dollar and the euro.
He
pointed to China’s strong exports, stabilising domestic activity, cheap currency
valuations and the recent rise in the producer price index, which indicated that
“the economy will exit deflation this year”.
After
returning to growth for the first time in more than three years in March, China’s
producer price index rose by a higher-than-expected 2.8 per cent year on year last
month, data from the National Bureau of Statistics showed.
“Additionally,
there is tolerance from policymakers to allow the yuan to gradually appreciate in
line with the push for yuan internationalisation,” Arora added.
Analysts
at Goldman Sachs, meanwhile, raised their forecasts for the yuan earlier this month,
predicting the Chinese currency would strengthen to 6.80 per US dollar within three
months, 6.70 in six months and 6.50 over the next 12 months.
“The
strength in recent fixing behaviour and the gradual drift up in exporter conversion
ratios suggest to us that a gradual but sustained move is still the right baseline,”
the bank’s analysts said in a note.