Outlook
Outlook: The yuan is likely to stay supported in the near term with a mild upside bias, aided by policy stability in China and the dedollarization push. Global institutions still see a stable yuan with upside bias in 2026, reflecting the PBOC’s capacity to stabilise the exchange rate under market pressure. Chinese stimulus and improving growth sentiment support resilience, and the yuan has recently traded near its strongest level against the USD in about 10 months.
Key drivers
- PBOC's digital yuan framework implemented January 1, 2026, strengthening its management and cross-border use.
- Central Economic Work Conference in December 2025 prioritized yuan stability, signaling potential interventions to prevent sharp fluctuations.
- Global institutions forecast yuan stability with upside bias in 2026, citing the PBOC's track record of stabilizing the rate under market pressure.
- China’s dedollarization push continues, promoting yuan use in international trade and finance.
Range
CNY/USD at 0.1447 is 1.1% above its 3-month average of 0.1431, having traded in a very stable 2.7% range from 0.1411 to 0.1449.
CNY/EUR at 0.1227 is just 0.7% above its 3-month average of 0.1219, having traded in a very stable 3.7% range from 0.1195 to 0.1239.
CNY/GBP at 0.1072 is just 0.9% above its 3-month average of 0.1062, having traded in a very stable 3.6% range from 0.1039 to 0.1076.
CNY/JPY at 22.38 is just above its 3-month average, having traded in a quite stable 4.2% range from 21.90 to 22.81.
What could change it
- A shift in the US policy path (surprise rate moves) or a stronger USD could pressure the yuan.
- PBOC policy changes or FX interventions, or a faster/slower dedollarization pace.
- Domestic data surprises (weaker growth, renewed property stress) or renewed trade tensions.
- Shifts in global risk sentiment and capital flows that alter cross-border demand for the yuan.
