Yuan set to extend decade‑long win streak into Lunar New Year

Published Fri, Jan 30, 2026 · 04:23 PM

[BEIJING] The Chinese yuan, riding its longest weekly rally in more than a decade, is expected to strengthen further as exporters boost demand for the currency ahead of the Lunar New Year.

Companies typically step up dollar‑to‑yuan conversions before the country’s holiday season, said Li Liuyang, chief foreign‑exchange analyst at China International Capital Corp, who forecasts a continued climb into the February break. Crédit Agricole CIB and Malayan Banking offered similar projections, as the yuan is poised to advance against the dollar onshore for 10 consecutive weeks – its longest winning streak since 2013.

That’s adding tailwinds to an already supportive outlook backed by a trade surplus, renewed interest in domestic stocks, and the prospect of further stimulus. Global market uncertainty and rising talk of dedollarisation have also buoyed the currency. In a report on Thursday, the US Treasury characterised the yuan as “substantially undervalued,” and called on China to allow its exchange rate to strengthen in a timely and orderly way.

“The yuan’s relative strength against the dollar is likely to sustain ahead of the Lunar New Year,” Li said. “The key is to watch the pace” of moves. 

Chinese companies ramp up foreign-exchange conversions back to yuan before the Lunar New Year mainly to pay bonuses and fund holiday-related expenses. This surge is also influenced by expectations of yuan appreciation during China’s busiest spending season.

In late December, the yuan broke the closely watched 7‑per‑dollar threshold in both the onshore and offshore markets. The onshore yuan held steady at around 6.95 per dollar on Friday.

“A test of the 6.90-figure cannot be ruled out, which is possible ahead of the Lunar New Year holiday,” said Fiona Lim, senior strategist at Maybank in Singapore. “USD/CNY could keep a downside bias in the lead-up to the Lunar New Year, barring a dramatic upswing in the USD.” 

The yuan’s outlook may look less certain after the Lunar New Year. The People’s Bank of China has tempered gains by setting its daily reference rate weaker than market expectations since late November, though it fixed a stronger rate this week as the dollar weakened. The currency’s appreciation is testing Beijing’s tolerance for strength, raising concerns over export competitiveness.

“The pace of yuan gains may slow as we get closer to the Lunar New Year period because you’d have to assume that the onshore trading activity would just naturally begin to moderate because of the holiday period,” said Paul Mackel, global head of FX research at HSBC Holdings in Hong Kong. 

Still, analysts, including those at Eurizon SLJ Capital and Macquarie Group, expect the yuan to gain through the year. 

“There seems to be a policy preference for extending appreciation,” Mackel said. “Ultimately we think it should be a gradual story.” BLOOMBERG