CNY strength reflects corporate FX conversion and official tolerance for appreciation amid solid export performance.
The Chinese yuan has climbed 3.3% against the USD year-to-date, outpacing other Asian currencies and nearing early-2025 highs on the CFETS basket. Analysts cite robust external demand and increased corporate foreign exchange conversion as key drivers.
Authorities appear to support further appreciation to advance RMB internationalization and address undervaluation concerns. However, gains are expected to remain measured due to soft domestic demand and reliance on exports, with potential near-term slowdown during the dividend payment season.
The currency’s strength contrasts with negative terms-of-trade pressures from elevated oil prices, underscoring resilience in external trade dynamics.