Outlook
The yuan remains in a tight, range-bound path with a modest upside bias into 2026 as forecasts point to strength beyond 7.00 per USD by year-end. CNY/USD sits around 0.1438, near 90-day highs, within a 0.1403–0.1438 range.
Key drivers
- PBOC offshore yuan bills in Hong Kong aim to absorb liquidity and reduce downward pressure on the yuan.
- Goldman Sachs and ING expect the yuan to strengthen beyond the 7.00 per USD mark by end-2026; RBC Capital Markets also sees USD/CNY drifting toward 7.00 by end-2026 due to trade surpluses, low Chinese inflation, and a stable policy stance.
- Powell opened the door to a U.S. rate cut, and markets broadly expect some easing, which could support the yuan if USD momentum softens.
- China’s stimulus-led support has helped balance stronger external headwinds, with the yuan recently trading at its strongest in about 10 months against the USD.
- Cross-rate context remains constructive for the yuan, with USD/CNY near multi-month highs but cross pairs showing ranges consistent with a stable backdrop.
Range
CNY/USD: 0.1403–0.1438; current around 0.1438 (90-day high).
What could change it
- A larger-than-expected shift in PBOC liquidity policy or offshore yuan issuance could alter the pace of yuan moves.
- A material change in the U.S. rate path (faster or slower Fed cuts) or a shift in USD strength could push USD/CNY higher or lower.
- Unexpected turns in Chinese growth data or policy, whether stronger or weaker than expected, could surprise markets.
- Revisions to forecasts from major banks (e.g., Goldman Sachs, ING, RBC) toward a stronger or weaker yuan would influence direction.
- Developments in trade relations or geopolitical dynamics could materially affect yuan volatility.
