Societe Generale analysts report that the Chinese Yuan has rallied for 11 consecutive weeks, pushing USD/CNY close to 6.90, last seen in May 2023. They attribute the move to expectations of capital repatriation into Chinese assets after regulators urged banks to limit UST holdings, and to the PBoC’s tolerance for a stronger Yuan, despite weak property‑sector fundamentals.

Capital flows and policy support Yuan

"In EM, the CNY marches on after 11 consecutive weeks of rally against the greenback and USD/CNY is now just one big figure away from returning below 6.90, a level that was last seen in May 2023."

"The latest leg of yuan gains is driven by optimism over acceleration in the repatriation of capital into Chinese assets after the regulators yesterday asked local banks to limit their UST holdings."

"Additionally, the PBoC has shown higher tolerance for stronger yuan with its daily fixings."

"Fundamentally, there aren’t many bright spots based on anecdotes and data though, especially in property sector."

"China’s top 100 land buyers signalled a pessimistic 2026 outlook as their land acquisition spending fell 50% yoy to CNY58bn in January."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)