Commerzbank’s Volkmar Baur expects the Chinese Yuan (CNY) to edge higher against the US Dollar (USD) while staying undervalued versus most other currencies. The bank projects USD/CNY at 6.90 by June 2026 and 6.70 by late 2027, with EUR/CNY broadly stable. Strong exports, a large current account surplus and state-directed bank flows underpin the managed currency stance.

Gradual USD/CNY appreciation, undervalued versus Euro

"Since early April of last year, the Chinese yuan has appreciated against the US dollar almost continuously. With the start of the Third Gulf War, this has now changed. Since then, USD/CNY has been moving sideways."

"In times of major global economic or geopolitical upheaval, the CNY consistently tends to enter a phase of stability against the US dollar."

"All in all, we therefore stand by our assessment: The Chinese government is likely to favor a gradual appreciation of the CNY against the US dollar."

"On the one hand, this would support the political goal of the CNY’s ongoing internationalization, as a steady appreciation against the US dollar incentivizes investors to hold assets denominated in CNY. On the other hand, a slight appreciation against the US dollar in the current global environment is likely to lead to a depreciation against most other currencies, and in particular against the euro."

"The CNY is therefore likely to remain significantly undervalued and continue to support the export economy."

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