The Chinese Yuan Continues to Rise Against the US Dollar

Author: Samir Al Khoury

Date: February 25, 2026

Overview

The USD/CNH currency pair has seen a significant decline, reaching a level of 6.8628, the lowest since April 17, 2023. This represents a decrease of approximately 2% year-to-date and a 4% drop from its peak of 7.1534 recorded on October 8, 2025. The article discusses the factors contributing to the strengthening of the Chinese yuan against the US dollar.

Key Factors Supporting the Yuan

• Reduction of US Treasury Holdings: China has halved its holdings of US Treasury bonds since 2013, which has implications for the yuan's strength.
• Cancellation of Tariffs: The recent cancellation of tariffs imposed by former US President Donald Trump, following a US Supreme Court ruling, has benefited China significantly.
• US Federal Reserve Interest Rate Cuts: Market expectations suggest that the US Federal Reserve may cut interest rates twice in the current year, which could weaken the dollar.
• People’s Bank of China Policies: The People’s Bank of China is actively working to strengthen the yuan to support the domestic economy, especially in light of a record trade surplus of $1.2 trillion last year.
• Rising US Public Debt: The US public debt has reached approximately $38.5 trillion, raising concerns about economic stability, particularly with inflation at 3% and GDP growth slowing to 1.4% in the fourth quarter.

Current Monetary Policy

The People’s Bank of China has maintained its one-year and five-year lending rates at 3.00% and 3.50%, respectively, for the ninth consecutive month, indicating a stable monetary policy aimed at supporting the yuan.

Technical Analysis

From a technical standpoint, indicators suggest a potential further decline in the USD/CNH pair:

• A bearish crossover between the 20-day and 50-day moving averages indicates negative momentum.
• The Relative Strength Index (RSI) is around 25, suggesting the pair is in oversold territory.
• The MACD indicator shows a bearish crossover, reinforcing expectations of continued downward pressure.

Conclusion

The article highlights the various economic and financial factors contributing to the rise of the Chinese yuan against the US dollar, suggesting that this trend may continue in the near future due to both fundamental and technical indicators.