Brown Brothers Harriman discusses China’s plans to promote the global use of the Yuan. The People’s Bank of China is working with the Hong Kong Monetary Authority to support this initiative. Although the Yuan is not as widely used as the Dollar, there are chances for its global usage to grow slowly. The development of essential infrastructure is seen as beneficial for the Yuan’s future.

A Gradual Growth

We expect a slow and controlled rise in the Yuan over the next quarter. This isn’t about a sudden surge, but rather a gradual decline in the USD/CNH exchange rate. Traders should consider strategies that benefit from low volatility and a steady direction. Recent data backs this view, showing the Yuan’s share of global SWIFT payments reached 4.8% in December 2025. This is an increase from 4.7% last year, indicating that central banks and companies are starting to use the Yuan more. This trend makes short USD/CNH positions more attractive. Last week, news of an expanded digital Yuan program for commodity trades with the UAE provided further support. Similar pilot projects in 2025 with Brazil and Argentina are also helping to build the necessary infrastructure. Each step is small, but they all move in the same positive direction.

Strategic Positioning

Given this outlook, selling out-of-the-money call options on USD/CNH seems like a promising strategy in the coming weeks. The controlled nature of the Yuan should keep implied volatility low, allowing traders to earn premiums while expecting the Dollar to weaken or remain stable against the Yuan. We believe the USD/CNH pair is likely to decline. Looking back at the property sector worries that caused concern in mid-2025, the Yuan surprisingly held strong above the 7.35 level. This shows that officials want to prevent significant weakness. This past performance gives us confidence that the Yuan is well-protected from major declines, making it a good currency to hold against the Dollar. This strong foundation suggests that forward contracts could also be an effective way to benefit from Yuan strength. The cost of holding a long CNH position against the Dollar remains appealing. This supports a long-term view that the Yuan’s growth in international usage will help stabilize its value. Create your live VT Markets account and start trading now.

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