Chinese yuan recovery gains momentum

The Chinese yuan is set to gain momentum by the end of this year due to tailwinds and speculation that the recent currency recovery will encourage exporters to boost U.S. dollar sales, analysts say.

The yuan has risen in both November and December over the past six years, with the biggest rise in 2022, according to data compiled by Bloomberg.

“The yuan is on the rise during these months as exporters of the local currency need more to meet cash requirements before the end of the year and Lunar New Year,” China International Capital said in a report.

The yuan has become one of Asia’s worst-performing currencies this year, meaning many companies are waiting for more favorable conditions to transfer their dollar deposits.

With the yuan currently set for the best month of the year as the dollar declines, exporters may begin to change their strategy, boosting optimism that this shift will be sustainable.

Speculation is mounting that the yuan has broken its long-term downward trend, with some analysts predicting that the Chinese currency will boost gains towards 7 yuan against the dollar, a level last reached in May.