China’s currency comeback: yuan seen as strong as 6.8 in 2026, breaking key dollar level

China’s currency appears poised to break through the psychological 7.0-per-dollar barrier next year, fuelled by US Federal Reserve rate cuts and thawing trade tensions, with some bulls betting that the yuan could strengthen to 6.8.

Analysts and onlookers are increasingly optimistic, with some citing the potential for a relatively weaker US dollar and pointing to signs that Beijing’s policy support is stabilising the world’s second-largest economy.

Guan Tao, a former senior official with China’s foreign exchange regulator, said key drivers include Fed easing and the prospect of stable China-US trade ties. In an interview with the National Business Daily, published on Thursday, Guan noted that the dollar’s credibility had been eroded by Washington’s actions.

Market moves are already reflecting the shift. The offshore yuan was at 7.048 per US dollar early Monday afternoon. The People’s Bank of China had set the yuan’s fixing rate at 7.0656 per US dollar on Monday morning – a relatively strong level in recent months.

Bank of America forecast that the yuan would strengthen to about 6.8 per US dollar in 2026, citing a stable daily fixing, policy stimulus and capital inflows, according to a report by the Shanghai-based Cailian Press financial outlet on Wednesday.

Similarly, Huatai Securities had projected the yuan would strengthen to 6.82 per US dollar by the end of next year, in a note earlier this month.

The last time the offshore yuan strengthened below 7.0 to the dollar was September 2024, according to financial data provider Wind.