ECONOMY

China’s Yuan Rises as Dollar Falters on Fed Rate Cut Bets

Published: Oct. 17, 2025 3:56 p.m. GMT+8

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The Chinese yuan strengthened against the U.S. dollar for a third straight day Friday, driven by a combination of a faltering greenback amid rising economic uncertainty in the U.S. and surprisingly robust Chinese export data.

The official central parity rate of the yuan was set at 7.0949 per dollar Friday, 19 pips firmer than the previous day. The currency has appreciated by 72 pips since Tuesday.

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The Chinese yuan strengthened against the U.S. dollar for three days, appreciating 72 pips since Tuesday, as the dollar weakened and Chinese export data outperformed expectations.
The U.S. Dollar Index fell about 0.7% amid Federal Reserve rate cut expectations and signs of U.S. economic stagflation, while China's exports rose 8.3% year-on-year.
Analysts note shifting market sentiment favors yuan appreciation, though the IMF considers the currency slightly overvalued.

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Who’s Who

China Galaxy Securities Co. Ltd.: Zhang Jun, chief economist at China Galaxy Securities Co. Ltd., notes a fundamental shift in market sentiment toward the yuan since May. He observes a move from a three-year depreciation expectation to one of appreciation, predicting this will create a positive feedback loop with capital inflows.

BOC International (China) Co. Ltd.: Guan Tao, the chief global economist at BOC International (China) Co. Ltd., advises caution against assuming the yuan is significantly undervalued despite its recent appreciation falling short of the U.S. Dollar Index's decline. He references an IMF report indicating the yuan's real effective exchange rate is slightly stronger than fundamentals imply.

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