Opinion: Yuan’s Recent Strength Signals End to Latest Bout of Depreciation

Does the recent strengthening of the yuan signal an end to the Chinese currency’s latest bout of depreciation? The short answer is yes.

After weakening from roughly 6.3 yuan to the U.S. dollar in March 2022 to about 7.3 yuan this past September, the Chinese currency has since appreciated beyond 7.2 yuan.

If the yuan continues to strengthen, that period would be the third cycle of depreciation for the currency over the last decade. The first lasted from 2014 to 2016, and the second from 2018 to 2019. In the latest wave of depreciation, the yuan weakened about as much as it did in each of the previous two cycles.