The Chinese yuan (CNY) has recently seen favorable movements amid a backdrop of positive economic indicators and strategic monetary policies. As of December 2025, the CNY has strengthened against the US dollar, reaching a 90-day high near 0.1427, which is 1.2% above its three-month average. The CNY to Euro exchange rate remains stable at 0.1212, aligned with its average, while it trades just below average against the British pound at 0.1057. Of particular note is the CNY's strength against the Japanese yen, climbing 3.0% to 22.35.
Analysts attribute the yuan's recent uptrend to China's substantial trade surplus, which exceeded $1 trillion year-to-date by November. The International Monetary Fund (IMF) has adjusted its GDP growth forecast for China to 5.0%, emphasizing the resiliency of the economy as exports rebounded by 5.9% year-on-year in November.
The People's Bank of China (PBOC) has played a pivotal role in managing the yuan, establishing a stronger central parity rate and directly intervening in forex markets. The ongoing efforts to internationalize the yuan, such as the digital yuan's expansion in cross-border settlements, further bolster its position in international trade and finance.
However, trade tensions with the U.S. and potential tariff escalations remain concerns for market stability. The recent remarks from Federal Reserve Chairman Jerome Powell regarding potential interest rate cuts may also influence the yuan's trajectory as markets anticipate monetary policy reactions.
The collective impact of these developments reflects a complex interplay of economic performance, monetary strategy, and international trade dynamics, showcasing how recent government stimulus and improving economic data have positively affected the CNY's value in the foreign exchange markets.
