Investment Houses See Yuan Breaking Key 7-Per-Dollar Level
By Reuters | 02 Dec, 2025

Narrowing of the yield differential with the dollar and easing trade tensions are seen as pushing up the yuan in 2026 to levels not seen since 2023.

Some investment houses expect the Chinese yuan to strengthen beyond the psychologically critical 7-yuan-per-dollar mark for the first time since 2023 next year, underpinned by narrowing yield differentials with the United States and prospects for easing trade tensions.

China's yuan has gained about 3.3% against the dollar so far this year to 7.0660 per dollar on Wednesday. A breach of the 7-yuan mark would mean a rise of about another 1%.

The average forecast of nine investment banks showed the Chinese currency is expected to strengthen to 6.92 per dollar at the end of next year.

KEY QUOTES:

** GOLDMAN SACHS

"Looking ahead, CNY appreciation against the USD is likely to remain gradual and choppy, with the USD leg being the key driver. A faster appreciation would require a clearer catalyst, such as repatriation flows from exporters toward year-end, as seen in September."

** ING

"In 2025, the People's Bank of China demonstrated not only the willingness but also the capability to maintain currency stability amid heavy market pressure. There is little to suggest that a change in position is imminent, as currency stability plays into several main objectives. 

"Barring a major change in priorities, the PBOC will continue to keep USD/CNY relatively stable, and the CNY will remain a low volatility currency versus the USD. We expect that USD/CNY may trade in a range of 6.90-7.30 next year."

** SOOCHOW SECURITIES

"With the U.S. dollar index expected to maintain structural weakness through 2026, current account surplus and net inflows through securities investment may push the yuan to the stronger side of 7 per dollar.

"Assuming annualised volatility remains within 3.0-4.0% throughout the year, the yuan is projected to appreciate toward 6.70-6.80 per dollar by the end of 2026."

** LGT

"The positive outcome from the Trump-Xi summit, combined with the PBOC's willingness to lower the USD/CNY fix and increased onshore FX conversion, points to scope for CNH appreciation.

"However, major appreciation (for dollar/yuan pair) below 7 is likely constrained by ongoing cyclical and structural challenges. The PBOC could follow a Federal Reserve rate cut as economic headwinds intensify including sluggish consumption and investment and renewed downward pressure on property prices."

** ANZ

"The outlook for CNY in 2026 is positive. China's growth momentum remains weak but stable. The economy faces several challenges, but the downside growth risks look manageable. China-U.S. trade tensions have eased, and we do not expect any major flare-ups in the relationship. 

"While we still expect the PBOC to cut the policy rate in 2026, we now expect a smaller 10bp cut. In contrast, the Fed is expected to ease by more." 

** MORGAN STANLEY

"Near-term USD/CNY moves will hinge on the dollar trend: our FX strategy team expects a tale of two halves for USD in 2026, with weakness in 1H before recovering in 2H, as the Fed halts rate cuts after April. 

"Accordingly, USD/CNY could strengthen to 7.0 by mid-2026 before weakening to 7.05 by year-end. In 2027, China's shift to lowflation should spur more capital inflows, lifting USDCNY to 6.95." 

** BOFA GLOBAL RESEARCH

"Our 2026 China GDP forecast of 4.7% signals growth stabilization, with the March NPC expected to detail the five-year plan and pivot to consumption and advanced manufacturing. This should keep China rates stable, while Fed cuts narrow yield differentials, supporting CNY.

"From a flow perspective, we expect more USD supply from exporters in 2026. Recent U.S.-China de-escalation improves trade outlook-our economists see 3% export growth next year despite a high base. 

"Additionally, exporters' willingness to sell USD is rebounding since 1Q25 as RMB sentiment improved. Indeed, we expect more exporter hedging to rise, as hedging costs fall due to U.S. Fed cuts and rising forward points."

(Reporting by Shanghai Newsroom; Editing by Mrigank Dhaniwala, Janane Venkatraman and Harikrishnan Nair)