USD/CNY is near 6.72 as BofA and MUFG converge on 6.60, with exporter conversion and policy tolerance giving the Yuan room to strengthen.
The US Dollar to Chinese Yuan (USD/CNY) exchange rate has slipped towards 6.72, extending a move that has quietly made the Yuan one of Asia’s stronger currencies this year.
Our live data put the inverse Yuan to Dollar rate around 0.1488, up roughly 4.1% since the start of 2026 and close to its strongest level in more than three years.
Bank of America and MUFG now reach broadly the same destination from slightly different routes: USD/CNY around 6.60.
BofA has actually become more bullish.
“We revise our year-end USD/CNY forecast to 6.6 vs. 6.7 previously,” its China strategy team said.
The forecast profile falls from 6.70 in Q3 to 6.60 in Q4 2026, stays at 6.60 in Q1 2027 and then drops again to 6.50 by Q2 2027.
“Export proceeds conversion and an undervalued CNY are the key drivers for this view, as well as increasing pressure from the G7 to address trade imbalances,” BofA added.
That exporter story is important.
Chinese companies receiving Dollars abroad have more incentive to convert those receipts when confidence in further Yuan depreciation fades, creating a flow that can become self-reinforcing without requiring the PBoC to engineer an outright currency rally.
BofA says the balance has shifted enough that “risks have shifted toward CNY appreciation”, citing both macro imbalances and “stronger-than-expected exporter FX selling from China”.
Yuan Valuation Looks Even More Striking
BofA’s valuation work is considerably more bullish than its actual forecast.
“Our FX COMPASS model indicates fair value of 5.96 for USD/CNY,” the bank said, while a separate two-to-three-year equilibrium model puts the pair around 6.05.
Its behavioural model meanwhile suggests CNY is roughly 10% undervalued against China’s trading partners.
That’s a long way below 6.60, although it is worth stressing that 5.96 and 6.05 are valuation estimates, not BofA spot forecasts.
The message is subtler: the Yuan can strengthen further without BofA considering it expensive.
MUFG comes to a similar conclusion.
Its August forecast profile has USD/CNY at 6.70 in Q3, 6.65 at year-end and 6.60 in both Q1 and Q2 2027.
The bank describes the “CNY appreciation trend” as intact, albeit more gradual, with strong exports and China’s expanding technology sector providing support alongside the softer Dollar environment.
MUFG noted that “strong exports performance continued to lend support for the currency”, while domestic weakness remains the main reason not to expect an uncontrolled rise.
That distinction fits the price action rather well.
As we noted earlier this month, the Yuan story has been less about a dramatic revaluation than China’s ability to maintain currency stability while much of the global FX market has dealt with intervention, energy shocks and changing Fed expectations.
The forecasts have since become stronger, particularly at BofA.
PBoC Is Slowing the Rally, Not Necessarily Reversing It
The People’s Bank of China does not appear interested in letting the Yuan simply run.
On Tuesday, USD/CNY briefly traded near 6.72 after the Yuan reached a three-and-a-half-year high, but the PBoC set its daily midpoint at 6.7852, significantly weaker than the market estimate around 6.7219.
The gap was the largest weak-side deviation in six months and was widely interpreted as Beijing leaning against the speed of appreciation.
That is not quite the same thing as defending a weaker currency.
A Chinese bank trader told Reuters that recent fixing behaviour appeared designed to temper the pace of gains rather than reverse the broader Yuan appreciation trend.
The policy backdrop supports that interpretation.
The PBoC has kept the one-year and five-year loan prime rates unchanged at 3.00% and 3.50% for fifteen consecutive months, despite weak domestic demand and July’s extraordinary contraction in new bank lending.
Its new five-year plan also explicitly pledges to keep the Yuan “basically stable” while expanding its international use in trade and investment.
In other words, Beijing appears willing to tolerate appreciation, but orderly appreciation.
USD/CNY Forecast: 6.60 Is Becoming Less of an Outlier
There are still good reasons for caution.
China’s domestic economy remains uneven, credit demand is soft and aggressive monetary easing would widen the yield disadvantage against the United States.
We highlighted that counterargument in our recent Rabobank Yuan analysis, where weaker domestic demand and possible PBoC rate cuts were identified as obstacles to sustained appreciation.
MUFG makes much the same qualification: weak growth can slow the move even if the underlying CNY direction remains constructive.
Yet the interesting part of the latest forecasts is that 6.60 no longer requires an especially heroic Dollar-bearish assumption.
BofA sees exporter conversion, valuation and trade imbalances pulling USD/CNY there by year-end.
MUFG gets there more gradually, during early 2027.
And the market itself has already fallen from roughly 7.00 at the beginning of the year to around 6.72.
The PBoC may not want a sprint towards 6.60.
Increasingly, though, it does not look as though Beijing is trying to stop the Yuan walking there either.
