- As of Monday's trading day, the Chinese yuan has appreciated nearly three percent against the US dollar this year, trading around 6.8040. It has also recorded a 2.6 percent increase against a basket of currencies from major trading partners, demonstrating strong asset resilience.
- HSBC (HSBC:US) has adjusted its foreign exchange path expectations in its latest research report, raising the year-end forecast for the yuan against the US dollar from 6.75 to 6.65, emphasizing the support from domestic structural dividends and external geopolitical premiums.
- Despite headwinds from worsening geopolitical situations in the Middle East and rising international energy costs, mainstream consensus from Wall Street and European banks like Goldman Sachs (GS:US) and Deutsche Bank (DB:US) points to China's unprecedented external current account surplus.
HSBC Raises Year-End Target to 6.65
The latest pricing model from the foreign exchange strategy team shows that the yuan has a moderate and further appreciation potential in the coming quarters. HSBC analysts clearly state in the disclosed report that, besides the absolute rigidity shown by export competitiveness, the acceleration of the yuan's internationalization, the diversification of asset allocation by global sovereign wealth funds amid long-term de-dollarization, and the rebalancing of China's internal economic structure collectively form the core domestic structural themes supporting the yuan's exchange rate. On external variables, since May 2025, Sino-US economic and trade relations have gradually entered a more stable and constructive development stage, significantly reducing the geopolitical risk premium factored into offshore capital markets for yuan assets.
Deutsche Bank Focuses on Upstream Import Forward Signals
European major investment banks have provided a clearer timeline for the recovery of demand for yuan assets. Deutsche Bank's Chief Economist for China, Xiong Yi, and economist Ou Deyun pointed out in a jointly written macro brief that China's recent surge in upstream basic product imports should not be simply viewed as a cost burden. From the perspective of macroeconomic cycle transmission logic, the substantial growth in imports of upstream raw materials and intermediate goods usually serves as a forward-looking indicator, predicting a further rebound in global export orders in the coming quarters, an accelerated recovery in China's domestic manufacturing demand, or a resonance of both. Based on this positive feedback from physical trade flows, Deutsche Bank has revised its baseline forecast for the yuan against the US dollar by the end of 2026 from 6.70 to 6.55.
Goldman Sachs Analyzes External Surplus and Energy Investment Dividends
Against the backdrop of global supply chains being impacted by the Strait of Hormuz and Middle East conflicts, Goldman Sachs has still chosen to raise its expectations for the yuan's bullish trend. The Goldman Sachs strategy team believes that the yuan has further and more sustained strengthening potential, stemming from China's unprecedented high external surplus. Although rising global commodity prices pose a certain degree of macro headwind in the short term, the medium-term outlook remains positive. Goldman Sachs particularly emphasizes that the current structural investments in energy security and renewable energy transition due to geopolitical conflicts are translating into strong demand for China's green manufacturing and clean energy export orders. Therefore, Goldman Sachs has comprehensively raised its forecasts for the yuan against the US dollar for the next three, six, and twelve months from 6.85, 6.80, and 6.70 to 6.80, 6.70, and 6.50, respectively.
