FINANCE

Offshore Yuan Breaches 7.0 Per Dollar to Hit 15-Month High

Published: Dec. 25, 2025 5:37 a.m. GMT+8

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On Tuesday, the offshore yuan, which trades more freely than its counterpart on the Chinese mainland, touched 6.9999 against the U.S. dollar during evening trading

The Chinese yuan surged this week, with the offshore rate briefly breaking through the key psychological threshold of 7 per dollar for the first time in 15 months — a move that highlights a decisive shift in market sentiment toward a currency many global investors and economists now see as deeply undervalued.

On Wednesday, the offshore yuan, which trades more freely than its counterpart on the Chinese mainland, touched 6.9999 against the U.S. dollar during evening trading. It later hovered around 7.005, a single-day gain of 0.18%, according to market data. The last time it traded at such levels was in September 2024.

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The Chinese yuan hit 6.9999 per U.S. dollar offshore for the first time in 15 months, reflecting over 1.2% appreciation since late November 2025.
Goldman Sachs estimates the yuan is undervalued by nearly 30%, forecasting appreciation to 6.85 per dollar by end-2026 with a gradual pace to avoid economic shocks.
Key drivers include a weaker dollar, easing trade tensions, China’s export surplus, and structural factors like higher productivity and undervaluation.

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Who’s Who

Goldman Sachs: Goldman Sachs chief China economist Shan Hui believes a gradual yuan appreciation helps avoid trade protectionism and aids internationalization without hurting exports. Goldman Sachs estimates the yuan is undervalued by nearly 30% and expects it to strengthen to 6.85 per dollar by the end of 2026. The bank's 2026 global foreign-exchange outlook attributes the yuan's appreciation to structural forces, comparable to the mid-2000s.

Shenwan Hongyuan Securities Co. Ltd.: Zhao Wei, chief economist at Shenwan Hongyuan Securities Co. Ltd., estimates that corporate demand for foreign-exchange settlement is at its highest level since the same period in 2024. He suggests that companies often accelerate settlements after the yuan has risen for one to two quarters, to pay bonuses and dividends or trim foreign-currency exposure before the Spring Festival.

PAG: PAG (霸菱亚洲投资基金) is mentioned in the article as the organization whose Executive Chairman, Shan Weijian, authored a commentary published by the Financial Times. In this commentary, Shan Weijian argued that a steady appreciation of the yuan could boost domestic consumption and improve China's trade relations. He suggested that the yuan might strengthen by at least 50% over the next five years.

Nomura: Nomura's chief China economist, Lu Ting, has cautioned against encouraging yuan appreciation if China is still experiencing deflation and lacks effective measures to stabilize the property market and consumption. Lu Ting warns that such a scenario could lead to a renewed depreciation of the yuan after an initial rise.

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What Happened When

September 2024：: The offshore yuan last traded at levels around 7 per dollar before the surge in December 2025.

September 2025：: The Federal Reserve resumed interest-rate cuts, contributing to a weaker U.S. dollar.

November 27, 2025：: A commentary by PAG Executive Chairman Shan Weijian was published in the Financial Times, arguing for yuan appreciation.

Late November 2025：: The onshore yuan began gaining, accumulating more than 900 basis points or over 1.2% by December 2025.

By December 2025：: The yuan gained over 1.2% and broke the 7 per dollar threshold for the first time in 15 months.

2025-12-23：: The Office of the United States Trade Representative announced the results of its Section 301 investigation into China’s semiconductor industry, deciding not to impose additional tariffs until at least mid-2027.