A report from TD Securities expects the Chinese Yuan (CNY) to remain stable by 2026, despite being undervalued now. The target for the USDCNY exchange rate is 6.7 by the end of the year. The People’s Bank of China (PBoC) is likely to keep things steady, with no significant changes anticipated. The report highlights that recent sell-offs in the US dollar did not lead to any major shifts in the Yuan’s value, thanks to the PBoC’s daily fixings.

Historical Perspective On CNY Gains

Since 2014, the gains of the CNY have not outstripped the overall drops of the USD. This suggests that moving towards a USDCNY rate of 6.7 fits with President Xi’s goal for a stable exchange rate. Since a major revaluation of the Yuan is unlikely this year, we should be careful when anticipating strong CNY performance. The PBoC has shown a clear preference for stability, limiting how much the Yuan can appreciate in the short term. Any increase towards the target of 6.7 will likely be slow and managed. Recent statistics reinforce this cautious outlook. For January 2026, China’s export growth was only 2.5% compared to last year, making it hard for authorities to support a stronger currency that might hurt trade competitiveness. Additionally, in the last two weeks, the PBoC has consistently set the USDCNY daily fixings slightly above market expectations. This indicates a preference for guidance rather than letting the Yuan soar.

Opportunities For Derivative Traders

For those trading derivatives, the current environment of controlled appreciation and low volatility makes selling options a good move. Since the beginning of the year, one-month implied volatility on USDCNY has dropped from about 5.2% to 4.7%. Selling out-of-the-money puts on USDCNY (or calls on CNH) allows traders to earn premium while betting that the currency won’t rise too quickly beyond certain levels. This matches the expectation of a slow decline in the dollar-yuan pair instead of a sudden drop. Looking back at the US dollar sell-off in late 2025, there was a prime chance for Beijing to let the CNY rally sharply, but it chose not to. This trend is in line with what we have seen since 2015, where the Yuan’s gains have not significantly outpaced declines in the broader dollar index. We can expect this focus on stability to continue in the coming weeks. Create your live VT Markets account and start trading now.

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