TD Securities strategists expect Chinese authorities to keep USD/CNY volatility low through the 2026 Two Sessions, while not resisting Chinese Yuan strength. They project a gradual decline in USDCNY to 6.7 by year-end 2026, in line with broad US Dollar weakness, and flag potential post-event tweaks to FX policy tools to temper excessive CNY gains.

PBoC seen tolerating stronger Chinese Yuan

"Authorities are likely to ensure volatility in USDCNY is kept to a minimum during China's most important political event of the year."

"We still believe the PBoC isn't fighting against CNY appreciation and would allow a gradual decline in USDCNY to 6.7 by year-end, tracking broad USD weakness."

"Judging by the pace of appreciation in the CNY, however, it seems like our year-end forecast of 6.7 in USDCNY could be reached by mid-2026."

"As such, we may see the PBoC tweak structural FX parameters to slow the gains in USDCNY after the Two Sessions conclude on 11 March."

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