|

CNY: Mildly appreciating – Commerzbank

The PBoC would prefer to see an appreciating yuan to help promote the internationalization of the currency. At the same time, to preserve the price competitiveness of Chinese exports, the PBoC probably doesn’t want to see the yuan appreciating too quickly against the dollar, given our view that the dollar is likely to come under pressure again in the coming year, Commerzbank's Senior Economist Tommy Wu notes.

Stock market rally attracts capital inflows and demand for CNY

"The yuan (or renminbi) has stabilized between 7.10 and 7.15 against the dollar since late August. This followed a broad appreciation of the yuan, from as weak as 7.35 against the dollar in April following the 'Liberation Day' tariffs announcement by the US. Obviously, the broad dollar weakness plays a role. However, we see a few more reasons behind this."

"The recent stock market rally attracted capital inflows and demand for CNY. The Shanghai-Shenzhen CSI300 Index rose 30% since the recent low in April. The US-China tariff truce reached in early May, which got extended in August for another 90 days and again extended in November for one year to November 10th 2026, has provided some relief for businesses and investors. China’s record trade surpluses support CNY. The trade surplus in the first ten months of the year reached USD965 billion in total, which is 22% more than the same period last year. The PBoC has been strengthening the daily CNY fixing towards 7.08 from around 7.15 in July, signaling the central bank is allowing a gradual appreciation of the yuan.

"While the above factors may remain supportive of the yuan in the near term, factors 1 and 3 could face headwinds. Recent capital flows into China’s onshore financial markets may ease or even reverse if economic fundamentals and companies’ profitability don’t improve much. Also, there have been signs of softening in export momentum, as suggested by softer PMI new export orders and slower growth in exports to non-US markets in October."

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD looks bid; retargets 0.7000

AUD/USD has managed to regain the 0.6900 hurdle and beyond in quite an auspicious start to the new trading week. The pair’s marked recovery has come on the back of the resurgence of the geopolitics-led selling pressure on the Greenback ahead of the release of key US CPI prints on Tuesday.

USD/JPY retreat in sync with USD, appraches 158.00

USD/JPY is back in the red at the start of the week on Monday, eyeing the broad US Dollar retreat amid easing US-Iran tensions. Traders also resorting to profit-taking following the blockbuster US Nonfarm Payrolls data-led rally. US CPI report is next in focus.

Gold keeps the bid tone near $4,100

Gold resumes its recovery on Monday, hovering around the $4,100 region per troy ounce. The precious metal’s solid performance comes amid fresh downside pressure on the US Dollar, rising US Treasury yields and a marked retracement in crude oil prices.

Ethereum Price Forecast: ETH drops to $2,100 as community debates Vitalik Buterin's SoV pitch
Ethereum (ETH) is down 4.6% on Monday as the crypto community debated co-founder Vitalik Buterin's argument that the top altcoin's long-term value should come from its store-of-value (SoV) properties rather than transaction fee burning.
Two Huangs don’t make a right: Nvidia CEO caught in scandal – NVDA slides

Nvidia CEO Jensen Huang sent employees an apology for being unfaithful to his wife, following reports that he may have been targeted in a foreign intelligence operation. Why is Nvidia trading roughly 5–6% below Friday’s close in the overnight market? And – more importantly – does this actually matter to the AI trade?

Gold reclaimed $4,100. Tuesday’s CPI test decides if it holds
Gold (XAU/USD) starts the week on a positive note, reclaiming the $4,100 psychological level as the US Dollar (USD) retreats from its recent highs. The precious metal recovers from Friday's losses, although investors remain cautious ahead of Tuesday's US Consumer Price Index (CPI) report, which could determine the next direction for Bullion.