Yuan’s Surge: China’s Currency Expected to Hit 6.8 Against Dollar by 2026
China’s currency, the yuan, is set to strengthen significantly against the US dollar in the coming years. As inflationary pressures in the US ease and trade relations improve, analysts predict the yuan could reach 6.8 per dollar by 2026.
Factors Influencing Yuan’s Strength
Several key factors are contributing to this anticipated surge:
- US Federal Reserve Rate Cuts: Easing monetary policy in the US is likely to weaken the dollar.
- Improving Trade Relations: A thaw in trade tensions between China and the US is expected to support the yuan.
- Policy Support from Beijing: The Chinese government is implementing measures to stabilize its economy.
Expert Opinions
Guan Tao, a former senior official with China’s foreign exchange regulator, expressed optimism regarding the yuan’s outlook. He emphasized the potential decline of the dollar’s credibility due to recent US actions. Analysts agree that current market dynamics reflect these predictions.
Current Performance of the Yuan
As of early Monday, the offshore yuan was trading at 7.048 against the dollar. The People’s Bank of China set the morning fixing rate at 7.0656, demonstrating relative strength compared to previous months.
Forecasts and Predictions
Bank of America projects the yuan will strengthen to approximately 6.8 per dollar by 2026. This estimate is based on a stable daily fixing rate, anticipated policy stimulus, and capital inflows.
Similarly, Huatai Securities predicts the yuan could reach 6.82 per dollar by the end of next year. The last recorded offshore yuan value below 7.0 against the dollar was in September 2024, according to data from Wind, a financial data provider.
