China Curbs Yuan Strength to Support Exports, Limited Upside Seen This Year
MacroDigital Finance
China's yuan has risen about 9% against the dollar over the past 20 months, hitting a three-and-a-half-year high, but authorities have slowed its pace to support exporters, and market participants see limited room for further appreciation this year. Market participants cite declining market volumes, reduced dollar selling by exporters, and the daily fixing rate set by the People's Bank of China as signs that authorities are curbing yuan strength. The median forecast for the yuan at year-end among 12 global investment banks is around 6.68 per dollar, little changed from 6.72 on the 31st. Zhu Chaoping of JPMorgan Asset Management (Shanghai) said that while the yuan is certainly undervalued, any upside by year-end would not be significant. Since November 2025, the central bank has set the fixing rate weaker than market expectations, and this month it has widened the divergence. According to sources, state-owned major banks have repeatedly bought dollars in the domestic market, reinforcing speculation that authorities are trying to curb yuan appreciation. Many analysts see yuan appreciation as inevitable in the long term, with Goldman Sachs forecasting the yuan at 6.4 per dollar in 12 months.
