USD/CNH Price Forecast: Offshore Yuan Holds Near 4-Year High as Trump-Xi Summit Approaches

The offshore yuan held around 6.69 per US dollar on Monday, remaining close to its strongest level since July 2022 as the Chinese currency continued to benefit from a combination of strong export flows, a softer US dollar and expectations surrounding the upcoming September 24 Trump-Xi summit.

The yuan reached 6.6957 per dollar in early trading, its strongest level in more than three and a half years, after the People’s Bank of China appeared to ease some of its efforts to restrain the currency’s appreciation. The PBOC’s daily fixing has increasingly aligned with market expectations, allowing the yuan to strengthen ahead of the high-level US-China meeting.

At the same time, China’s central bank kept its benchmark Loan Prime Rates unchanged for a 16th consecutive month. The one-year LPR remained at 3.00%, while the five-year LPR stayed at 3.50%, reflecting policymakers’ cautious approach to additional monetary easing while the yuan is strengthening and major global central banks are moving toward tighter policy.

The currency’s strength comes despite evidence of weaker domestic credit demand. Chinese banks issued only 60 billion yuan of new loans in August, well below expectations of 400 billion yuan, while outstanding yuan loans grew at a record-low 4.9% year on year.

For the offshore yuan, the immediate focus is therefore shifting toward the Trump-Xi meeting on September 24, with trade, tariffs, artificial intelligence, rare-earth materials, supply chains and agricultural purchases among the issues under discussion.

USD/CNH Market Snapshot

Offshore Yuan Price Today: Why the Yuan Is Strengthening

The offshore yuan’s advance reflects a combination of domestic and international factors.

China’s export performance has remained relatively strong, while the yuan has benefited from increased conversion flows and a more supportive PBOC fixing.

The currency has now reached levels not seen since July 2022, with the offshore yuan touching 6.6957 against the dollar on Monday.

The PBOC’s recent approach is particularly important.

Rather than aggressively resisting yuan appreciation, the central bank has allowed the daily fixing to move closer to market expectations. Reuters reported that Monday’s move represented a softening of previous efforts to restrain the currency’s rise.

That has helped reinforce expectations that Chinese policymakers are currently comfortable with a stronger currency, at least while exchange-rate appreciation remains orderly.

PBOC Keeps Loan Prime Rates Unchanged

The PBOC kept both benchmark lending rates unchanged on September 21.

The one-year LPR remains 3.00%, while the five-year LPR remains 3.50%. The decision marked the 16th consecutive month without a change.

The decision highlights the difficult balance facing Chinese policymakers.

Domestic economic conditions could justify additional support, particularly given weak credit demand and continued property-sector weakness.

However, aggressive monetary easing could place renewed downward pressure on the yuan, particularly as the Federal Reserve has restarted its own rate-hiking cycle.

The interest-rate differential therefore creates a constraint on how aggressively Beijing can use monetary policy to support domestic demand.

China’s Weak Credit Demand Remains a Concern

The strength of the yuan contrasts with weaker domestic credit conditions.

Chinese banks issued just 60 billion yuan in new loans during August, compared with market expectations of around 400 billion yuan.

Household borrowing contracted for a sixth consecutive month, while outstanding yuan loans expanded only 4.9% year on year, the slowest pace on record.

The figures point to subdued demand for borrowing from both consumers and businesses.

This creates an important medium-term tension for the yuan.

A strong currency can help reduce imported inflation and improve purchasing power, but an excessively strong exchange rate could also create additional pressure for exporters if domestic demand remains weak.

For now, however, the PBOC appears more focused on maintaining currency stability than pursuing aggressive monetary stimulus.

US-China Trade Summit Becomes the Main Currency Catalyst

The September 24 Trump-Xi summit is now the dominant event risk for the yuan.

US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng held talks in New York ahead of the meeting, with discussions covering AI, trade, critical minerals and the possibility of extending the existing tariff truce.

The two sides are also discussing a framework for reducing tariffs on selected non-sensitive goods and establishing mechanisms for further economic consultations.

The trade truce is currently scheduled to run until November 10, making the summit particularly important for the outlook beyond the current period.

For the yuan, the distinction between an agreement that maintains the existing framework and a renewed escalation in tariffs could be significant.

AI and Rare Earths Add Another Layer to the Summit

The US-China relationship is no longer focused solely on tariffs.

Artificial intelligence and critical-mineral supply chains are becoming increasingly important components of bilateral negotiations.

Bessent proposed a formal AI safety notification mechanism during talks with He Lifeng, while rare-earth supply restrictions are also expected to feature prominently in the discussions.

The US and China have also agreed to launch a formal dialogue on artificial intelligence, creating a mechanism for future discussions over AI safety and technology risks.

For currency markets, progress in these areas could reduce some of the uncertainty surrounding global supply chains and Chinese-US trade relations.

US Interest Rates Create a Counterweight

The yuan is strengthening even though the Federal Reserve has moved in the opposite direction to the PBOC.

The Fed raised its benchmark rate by 25 basis points to 3.75%-4.00% last week and indicated that further tightening remains possible.

US Treasury yields have consequently remained elevated, with markets still pricing additional Fed increases.

This creates a significant interest-rate differential in favour of the US dollar.

The yuan’s ability to strengthen despite this differential therefore reflects the importance of other forces, including China’s trade surplus, exporter conversion flows and the PBOC’s exchange-rate management.

If US yields rise further, however, the interest-rate differential could become a stronger headwind for the yuan.

China’s Trade Surplus Supports the Yuan

China’s external trade position remains an important structural support for the currency.

Reuters reported Monday that China’s global trade surplus is on track to exceed $1 trillion for a second consecutive year, highlighting the continuing strength of the country’s export sector.

Strong exports generate foreign-currency revenues that can ultimately increase demand for the yuan as companies convert dollar receipts into domestic currency.

This is one reason the current yuan appreciation is occurring despite weak domestic credit conditions.

The currency is therefore being supported by a relatively strong external sector while domestic demand remains more subdued.

USD/CNH Technical Analysis

The offshore yuan is trading close to 6.69, while USD/CNY technical calculations place the daily pivot around 6.709, with the main support/resistance range between approximately 6.6994 and 6.7171.

Because USD/CNH is quoted as yuan per US dollar, a decline in the pair represents yuan appreciation, while a rise represents yuan weakness.

The recent move toward 6.69 therefore keeps the yuan’s broader strengthening structure intact.

A sustained break below the 6.69 area would put further multi-year lows into focus, while a recovery above 6.71-$6.72 would indicate that dollar demand is returning.

The 6.70 psychological level is also important because the yuan has recently moved through this threshold for the first time since 2022.

Bullish Sentiment

1. Yuan Holds Near Multi-Year Highs

The offshore yuan has reached its strongest level since July 2022, touching 6.6957 against the dollar.

2. PBOC Is Allowing Greater Yuan Strength

The PBOC has recently allowed its daily fixing to move closer to market expectations, suggesting less resistance to an orderly appreciation of the currency.

3. Strong Chinese Exports

China’s export sector remains robust, with the country’s trade surplus on track to exceed $1 trillion for a second consecutive year.

4. US-China Engagement

The upcoming Trump-Xi summit and renewed economic negotiations could reduce some trade uncertainty if both sides maintain the current framework.

5. Weaker US Dollar

The US Dollar Index is around 100.23, while several Asian currencies have benefited from softer oil prices and changing global risk conditions.

Bearish Sentiment

1. US-China Interest-Rate Differential

The Federal Reserve has restarted rate increases while China’s LPRs remain unchanged, maintaining a significant interest-rate differential in favour of US assets.

2. Weak Chinese Credit Demand

August lending data showed extremely weak domestic credit demand, with new loans far below expectations and loan growth at a record-low 4.9%.

3. Potential PBOC Rate Cut

Although policymakers are currently holding rates steady, weaker growth, subdued inflation and weak credit conditions could eventually increase pressure for additional monetary easing.

4. Trade Negotiations Could Disappoint

The September 24 summit could fail to produce major new agreements, while unresolved issues involving tariffs, rare earths, technology and agricultural purchases could continue to create volatility.

5. Yuan Approaches a Major Psychological Level

The move toward 6.69 places the currency at levels not seen for more than four years. Extended appreciation could eventually encourage Chinese authorities to take measures to limit excessive one-way moves.

USD/CNH Price Forecast: What Traders Are Watching

The immediate focus for USD/CNH is the 6.69-6.71 region.

A sustained move below 6.69 would keep attention on the yuan’s multi-year highs and could open the way for further declines in USD/CNH.

A recovery above the 6.709 pivot would instead bring the 6.717 area into focus, while a stronger dollar recovery could push the pair back toward higher resistance levels.

USD/CNH Technical Map

Yuan-strength / USD-CNH downside levels

• 6.7000 — major psychological level
• 6.6957 — recent multi-year low
• 6.6900 — immediate downside reference

USD-CNH upside levels

• 6.7090 — daily pivot
• 6.7171 — immediate resistance
• 6.7200 — psychological resistance

The September 24 Trump-Xi meeting is likely to determine whether the market remains comfortable with the yuan’s current strength or begins pricing greater bilateral uncertainty.

Offshore Yuan’s Fundamental Outlook

The yuan enters the latest trading week with a particularly unusual combination of strong external fundamentals and weaker domestic conditions.

China’s export sector remains robust, while the country’s trade surplus continues to provide a substantial flow of foreign currency.

At the same time, domestic lending demand remains weak and property-related borrowing continues to weigh on overall credit growth.

The PBOC is therefore managing two competing objectives: supporting economic activity while avoiding excessive monetary easing that could undermine the currency.

For now, the exchange rate itself appears to be receiving greater tolerance from policymakers.

The upcoming Trump-Xi meeting could become the next major test.

A stable trade relationship could reduce the risk premium surrounding Chinese assets, while renewed tariff or technology tensions could increase volatility.

Currency Hedger View

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Changes in USD/CNH can affect the cost of Chinese imports, the value of export receipts and the effective margin on international contracts.

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Today Markets View

The offshore yuan’s move toward 6.69 per dollar puts the currency at its strongest level since 2022, while the PBOC’s decision to maintain the 3.00% one-year LPR and 3.50% five-year LPR demonstrates the limits currently facing Chinese monetary policy.

The yuan is being supported by strong exports, a large trade surplus and a more permissive PBOC approach to appreciation. At the same time, weak domestic credit demand and the possibility of eventual monetary easing remain important counterweights.

The immediate technical focus is 6.69, with 6.6957 representing the recent multi-year extreme and 6.709-6.717 forming the first important USD/CNH recovery zone.

Beyond the technical picture, the September 24 Trump-Xi summit is the key event for currency markets. Trade, tariffs, AI, rare earths and supply chains could all influence expectations for the yuan and the broader Asian currency complex.

For traders and businesses exposed to the Chinese currency, the combination of PBOC policy, US interest rates, Chinese exports, domestic credit conditions and US-China relations will remain central to the USD/CNH outlook.

Louis Roche, Analyst, Today Markets

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