Yuan Rallies to One-Year High on Trade Optimism and Fed Cut Bets
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The Chinese yuan has climbed to its highest level in nearly a year against the U.S. dollar, buoyed by softening trade tensions with Washington and growing expectations that the U.S. Federal Reserve will lower interest rates.
On Tuesday, the onshore yuan closed official trading at 7.0938 per dollar, gaining 118 basis points from Monday. It strengthened further overnight, briefly breaking below the 7.085 mark. The offshore yuan mirrored the move, appreciating to around 7.081, a daily rise of 0.3%.
China’s central bank set the yuan’s daily reference rate at 7.0826 per dollar, 21 basis points stronger than the previous day.
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- The Chinese yuan reached its highest level against the U.S. dollar in nearly a year, closing at 7.0938 per dollar and briefly trading below 7.085.
- The appreciation follows easing U.S.-China trade tensions and expectations of a U.S. Federal Reserve rate cut, with market odds for a December cut above 70%.
- Analysts suggest the yuan's multiyear depreciation may be ending, potentially attracting more global capital to yuan assets.
- Soochow Securities
- Lu Zhe, chief economist at Soochow Securities, believes the yuan's depreciation cycle from 2022 to 2024 may have concluded. He predicts potential medium- to long-term gains for the yuan, driven by strong export growth, increased foreign investment in yuan assets, and a projected weaker dollar. This appreciation could extend into late 2025 and 2026.
- China International Capital Corp
- Miao Yanliang, chief strategist at China International Capital Corp, believes yuan assets could benefit from the accelerating fragmentation of the global monetary system if policy is well executed, potentially leading to capital flowing back into Chinese markets. He also noted that the current dollar depreciation cycle is a key opportunity to enhance the yuan's flexibility.
- 2022：
- The yuan's multiyear depreciation cycle began.
- 2022-2024：
- The yuan experienced a depreciation trend.
- November 24, 2025：
- The onshore yuan closed trading as the baseline for the next day's appreciation.
- Evening of November 24, 2025：
- Presidents Xi Jinping and U.S. President Donald Trump spoke by phone to discuss progress on a trade pact and bilateral economic ties.
- November 25, 2025：
- The onshore yuan closed at 7.0938 per dollar, gaining 118 basis points from the previous day. The U.S. dollar index fell 0.28% and briefly dipped below the 100 mark. China's central bank set the yuan’s daily reference rate at 7.0826 per dollar, 21 basis points stronger than November 24, 2025.
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