Chinese Yuan Expected to Remain Stable with an Upside Bias in 2026, Experts Say
Shanghai, December 26, 2025 — Multiple global financial institutions have projected a stable outlook for the Chinese yuan (CNY) in 2026, anticipating low volatility accompanied by a gradual appreciation against the US dollar. This forecast comes on the heels of the yuan briefly strengthening beyond the 7.0 per US dollar mark on Thursday, signaling a notable shift in global market sentiment toward the Chinese currency.
Robust Policy Support Bolsters Yuan Stability
According to global financial services group ING, the People’s Bank of China (PBOC) has demonstrated both the resolve and capacity to stabilize the yuan amid intense market pressures throughout 2025. ING highlighted that “the PBOC showed not only its determination but also its ability to maintain currency stability amid heavy market stress,” underscoring the institution’s policy credibility as a cornerstone underpinning the yuan’s resilience.
Domestic Market Optimism Driven by Policy and Capital Flows
China’s domestic brokerage firms also hold a positive view of the yuan’s trajectory. Industrial Securities pointed to the recent appreciation cycle as possibly still in its early stages. The firm attributes this to several factors: a more accommodative stance by the U.S. Federal Reserve, a narrowing interest rate differential between China and the U.S., and a gradual return of capital flows that had previously departed.
Industrial Securities emphasized that the yuan’s strengthening is not merely a reaction to dollar weakness but reflects stronger internal fundamentals, such as increased capital inflows and rising demand for foreign-exchange conversion within China.
International Perspectives Highlight Positive Policy and Diplomatic Signals
International private banking and asset management group LGT also noted encouraging external and policy developments. The outcome of recent China-U.S. leadership talks, combined with the PBOC’s readiness to lower the USD/CNY fixing rate and increased onshore foreign exchange conversion activities, suggests further potential for yuan appreciation.
Chinese financial institution Shenwan Hongyuan further attributed the yuan’s recent gains predominantly to proactive central bank management and shifts in the external dollar environment. Their analysis indicates that policy-driven factors hold more influence than seasonal capital flow adjustments in driving yuan movements.
Macro Outlook Supports Steady Economic Growth and Currency Stability
From a macroeconomic perspective, Bank of America Global Research projects China’s GDP growth at 4.7 percent for 2026, signaling stable economic momentum. The bank anticipates that the National People’s Congress scheduled for March will unveil the next five-year plan, with an intensified focus on boosting domestic consumption and developing advanced manufacturing sectors.
This policy direction is expected to keep China’s interest rates broadly stable. Simultaneously, anticipated rate cuts by the U.S. Federal Reserve are likely to narrow the yield differential between the two countries further, providing additional support for the yuan’s valued standing.
As the yuan shows resilience backed by firm policy actions, positive bilateral engagements, and steady economic growth, market watchers view 2026 as a year of stability with a potential for moderate currency gains. The convergence of internal and external factors appears to be shaping a more favorable environment for the Chinese currency amid evolving global financial dynamics.
Reported by CGTN with additional input from Reuters