Outlook
The yuan is seen with a modest upside bias into 2026 as domestic policy support and international dynamics align. PBOC easing to bolster credit, including a CNY 1 trillion facility for private enterprises, supports growth and yuan resilience. BRICS discussions of alternative payment rails and a blockchain-based trade token could gradually lessen dollar reliance in trade. Markets and banks have penciled in yuan strength beyond the 7 per USD level in 2026, with ING forecasting USD/CNY toward about 6.85 by year-end. Powell’s openness to rate cuts adds to near-term dollar softness, which could further assist the yuan, though policy paths and domestic weakness in sectors like real estate keep upside risks contained.
Key drivers
- PBOC's monetary easing measures (January 15, 2026): eight initiatives to stimulate credit in key sectors, including rate cuts on structural policy tools and a CNY 1 trillion facility for private enterprises (People’s Bank of China). (Policy action)
- BRICS Nations explore alternatives to US dollar (January 2026): consideration of a blockchain-based trade token and other mechanisms to reduce dollar reliance in cross-border trade. (Geopolitical/financial architecture)
- Controlled CNY appreciation (January 2026): PBOC managing yuan’s appreciation; ING sees USD/CNY easing toward 6.85 by end-2026. (Policy stance and market expectation)
- Global forecasts for CNY strengthening (December 2025): investment banks anticipate yuan strength beyond the 7 per USD mark in 2026, supported by narrowing yield differentials and easing trade frictions. (Banks’ view)
- Market backdrop: Fed remains open to cuts, which can ease US rates and support EM currencies, while China benefits from stimulus-led growth and a supportive policy backdrop.
Range
CNY/USD at 0.1438, 1.1% above its 3-month average of 0.1422, having traded in a very stable 2.6% range from 0.1403 to 0.1440.
CNY/EUR at 0.1213, just below its 3-month average, having traded in a very stable 3.7% range from 0.1195 to 0.1239.
CNY/GBP at 0.1051, 1.1% below its 3-month average of 0.1063, having traded in a very stable 3.8% range from 0.1039 to 0.1078.
CNY/JPY at 22.30, 0.5% above its 3-month average of 22.18, having traded in a relatively stable 6.1% range from 21.50 to 22.81.
What could change it
- A faster or larger-than-expected PBOC stimulus or credit support could push the yuan stronger.
- A clearer path for US rate cuts or a softer dollar could lift the yuan, while a hawkish US shift could weigh on it.
- Tangible progress on BRICS trade tokens or non-dollar settlement mechanisms could underpin yuan strength over time.
- A positive China data surprise (growth, stabilization in real estate) could reinforce the yuan’s upside.
