The market bias for the HKD to CNY exchange rate is currently bearish.
The key drivers include an interest rate differential, with the HKMA maintaining stable rates, while the People's Bank of China is poised to ease policy in 2026. Sentiment around the yuan is bolstered by forecasts of gradual appreciation due to narrowing yield differentials and expectations of improved trade relations. Additionally, ongoing government stimulus in China may support economic stability.
The near-term trading range is likely to remain within recent historical levels, which have seen the HKD trading at near 90-day lows against the CNY, reflecting a stable but disadvantageous position for the HKD.
Upside risks could emerge from unexpected strength in the Hong Kong economy, while downside risks include a faster-than-anticipated easing of monetary policy in China, which can further weaken the HKD's position against the CNY.