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Sylvia Ma

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.”
I’m most bullish on the Chinese yuan and Australian dollar, backed by strong fundamentals and policy support
Rohit Arora, UBS Investment Bank
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.


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Beijing has set the yuan at its strongest level against the US dollar since early 2023, with banks projecting further appreciation


Beijing has set the yuan at its strongest level against the US dollar since early 2023, with banks projecting further appreciation.


China’s yuan hits 3-year high as global banks issue bullish forecasts

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Beijing has set the yuan at its strongest level against the US dollar since early 2023, with banks projecting further appreciation

Beijing has set the yuan at its strongest level against the US dollar since early 2023, with banks projecting further appreciation