The yuan is poised to strengthen again in September, with analysts expecting it to reach 6.70-6.73 per dollar.
The yuan is poised to strengthen again in September, with analysts expecting it to reach 6.70-6.73 per dollar. This is driven by recovering exports and a weaker dollar, possibly if US inflation is lower than expected and the likelihood of further interest rate hikes by the Fed is reduced.
On August 11, 2569, at 10.51:XNUMX a.m., Bloomberg News reported that Analysts expect the Chinese yuan to potentially strengthen against the US dollar in September. After trading within a narrow range recently, supported by seasonal factors including the onset of a typically stronger Chinese export season, the end of dividend payment season, and the prospect of a weaker dollar if US inflation data comes in lower than expected, reducing the likelihood of the Federal Reserve (Fed) raising interest rates.
Over the past month, the offshore yuan has fluctuated within a range of only 560 pips, compared to a monthly average of approximately 845 pips in 2026, reflecting relatively sluggish trading. This is partly due to the People's Bank of China (PBOC) consistently setting its daily reference rate at a weaker level than the market anticipated.
The daily reference rate, which serves as a baseline to limit the yuan's domestic movement by no more than 2% in each direction, has been weaker than analysts' expectations for more than four consecutive months—the longest period since Bloomberg began collecting data in 2018.
Carie Li, a strategist from DBS Bank. It is estimated that the yuan could strengthen to 6.70-6.73 yuan per dollar next month if US inflation figures come in lower than expected, reducing the market's likelihood of further Fed interest rate hikes. Both BNY and Bloomberg Intelligence also see the yuan as having a strengthening trend.
Weaker-than-expected U.S. employment data last week has dampened expectations that the Fed will accelerate interest rate hikes. Investors are now awaiting U.S. inflation figures this week to assess the next direction of interest rates.
Wee Khoon Chong, Senior Asia Pacific Market Strategist at BNY. It was noted that the dollar-yuan pair is likely to decline due to the weakening of the dollar, which means the yuan is strengthening. However, while the yuan's appreciation reflects market confidence, it has not yet coincided with a broader recovery in the Chinese economy.
Another contributing factor is the end of the dividend payment season. Chinese companies typically experience increased demand for foreign currency to pay dividends to foreign investors, and this flow usually peaks before the end of August. As demand for foreign currency decreases, pressure on the yuan tends to ease.
Stephen Chiu, Head of Emerging Markets Strategy at Bloomberg Intelligence. We also believe that China's export orders are likely to increase in the coming weeks, especially for electronics, which will support both the export sector and the yuan.
Chiu anticipates that September could be the point where the yuan begins to show significant movement again, after the dividend payment season ends and Asia enters a period where exports and currencies are often seasonally supported.
This trend comes amid ongoing tensions between China and the United States and the European Union, particularly regarding the management and value of the yuan.
refer : bloomberg.com
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