- Offshore and onshore market data show that the CNY/JPY cross rate has surpassed the 23.40 mark, reaching a historical high since the 2005 exchange rate reform. Recently, it has traded around 23.302 during the Asian trading session. Over the past six months, the Japanese yen to RMB central exchange rate has continuously declined from a high of 0.0475 in October 2025 to around 0.0428.
- According to the General Administration of Customs of China (GACC), China's trade surplus recorded $51.1 billion in March. Annual exports in 2025 achieved a 5.5% increase after successful structural shifts to Southeast Asian and European markets. The continuous current account surplus provides robust endogenous buying support for the RMB exchange rate.
- Statistics from the Japanese Ministry of Finance (MOF) indicate that Japan's long-term trade deficit structure with China cannot be fully offset by the growth in inbound tourism consumption, and the pressure to sell yen for actual trade settlements remains significant. Dai-ichi Life Asset Management points out that during periods of geopolitical upheaval, Chinese yuan-denominated assets are attracting a portion of safe-haven capital inflows.
Exchange Rate Pricing Basis and Current Account Data
The structural appreciation of the RMB against the yen in this cycle is primarily driven by the divergence in current account quality and trade structure between China and Japan. Facing adjustments in external tariff policies, China has successfully maintained high export prosperity by accelerating the diversification of supply chains to ASEAN and EU markets. The substantial $51.1 billion trade surplus in March directly translates into ample foreign exchange supply in the interbank forex market. With the cross-border trade RMB settlement ratio steadily rising, corporate settlement demand systematically supports the valuation of the RMB against non-US currencies, prompting the CNY/JPY cross rate to break historical resistance levels.
Capital Flows and Reassessment of Safe-Haven Sentiment
Beyond macro interest rate differentials, geopolitical variables are reshaping the safe-haven attributes of regional currencies. Traditionally seen as a safe-haven, the yen has shown a diminishing haven allure during recent Middle Eastern conflicts due to Japan's domestic weak economic fundamentals and the slow pace of the Bank of Japan's monetary policy normalization. In contrast, analysts at Dai-ichi Life Asset Management reveal a new capital flow trend where the systemic rise in macro volatility in emerging markets is driving some international capital towards RMB-denominated bonds, which are characterized by sovereign credit stability and controllable inflation levels. This cross-border asset rebalancing triggered by geopolitical uncertainties intensifies the unilateral pressure of the yen against the RMB at the microtransaction level.
Central Bank Intervention Risk and Forward Guidance
Although a strong local currency exchange rate helps reduce the local currency cost of imported commodities, the rapid unilateral appreciation of the exchange rate has raised concerns among macro fundamental researchers. From the trade condition index perspective, excessive RMB appreciation against the yen could marginally erode the price competitiveness of Chinese export companies in third-country markets, especially in the machinery manufacturing and automobile export sectors competing directly with Japanese firms. If this cross rate continues to rise at a speed diverging from the fundamental average, China's relevant foreign exchange management departments are expected to manage expectations through counter-cyclical macro-prudential tools or middle-rate counter-cyclical factors. However, driven by the current account surplus, the mid-term strength structure of the RMB relative to the yen is unlikely to fundamentally reverse in the short term.
