Chinese Yuan Expected to Remain Stable with Upside Bias in 2026, Say Global Institutions
Shanghai, December 26, 2025 — Multiple leading financial institutions have projected that the Chinese yuan (CNY) will maintain a stable exchange rate with a gradual appreciation trend in 2026. This outlook comes as the yuan recently strengthened briefly beyond the 7.0 mark against the US dollar (USD), signaling a broader shift in global market sentiment.
Central Bank’s Strong Role in Currency Stability
Global financial services group ING highlighted the People’s Bank of China’s (PBOC) commitment and adeptness in managing exchange rate fluctuations. "In 2025, the PBOC showed not only its determination but also its ability to maintain currency stability amid heavy market stress," the group noted. ING emphasized that the PBOC’s policy credibility remains a key anchor underpinning confidence in the yuan.
Domestic Brokerages See Appreciation Just Beginning
Following the currency’s recent strengthening, Chinese brokerage Industrial Securities expressed optimism about the yuan’s appreciation cycle. The brokerage attributed this potential uptick to several core factors: a shift toward a more dovish stance by the US Federal Reserve, a narrowing China-US interest rate differential, and the gradual return of capital inflows that had previously exited the market.
According to Industrial Securities, the yuan’s recent gains are not simply reactive to dollar weakness but also reflect robust internal dynamics, including rising foreign exchange conversion demand and capital returns to China.
Positive International Sentiment and Policy Signals
International private banking and asset management firm LGT also cited improving external conditions and policy signals as contributors to the yuan’s strength. The positive outcomes from the latest China-US leaders’ talks, combined with the PBOC’s readiness to lower the USD/CNY fixing rate and increased onshore foreign exchange conversions, suggest further room for yuan appreciation.
Similarly, Chinese financial institution Shenwan Hongyuan attributed the yuan’s rise largely to proactive central bank management amid shifting external dollar conditions, underscoring the decisive influence of policy interventions as opposed to mere seasonal capital flows.
Macroeconomic Factors Support Yuan Stability
From a macroeconomic perspective, Bank of America Global Research forecasted China’s GDP growth at 4.7 percent for 2026, indicating stabilization in the country’s economic momentum. The bank expects the upcoming National People’s Congress session in March to unveil a new five-year plan with a stronger focus on consumption and advanced manufacturing industries. These economic priorities are anticipated to keep China’s interest rates broadly stable.
Moreover, anticipated interest rate cuts by the US Federal Reserve are likely to further narrow the yield differential between China and the US, providing additional support to the yuan’s gradual appreciation.
As China continues to navigate a complex global economic environment, expert analyses suggest the yuan is well positioned to maintain a steady path with an upward bias into the new year, supported by strong policy measures and improving international relations.
Reporting by CGTN with inputs from Reuters.