News of a US\u2013Iran ceasefire lifted the Chinese yuan and led to a revised USD\/CNY forecast band of 6.70\u20137.05, from 6.85\u20137.25. The year-end USD\/CNY forecast was cut to 6.75.<\/p>\n
In 2026 to date, the onshore yuan is up 2.3% versus the US dollar and has outpaced most other Asian currencies. Since the Iran war began, CNY and CNH were the only currencies in the tracked basket to gain against the dollar.<\/p>\n
Policymakers have allowed more currency strength through daily PBoC fixings, with the counter-cyclical factor near neutral in March and early April. The foreign exchange risk reserve ratio was cut from 20% to 0%, and expected PBoC rate cuts were pushed from 2Q26 to the second half of 2026.<\/p>\n
The two-year US\u2013China yield spread widened to its highest level since February 2025, but the yuan only softened modestly. The CFETS RMB index is up 2.3% since the war started and 2.9% year-to-date, with weights including the euro (17.9%), US dollar (18.3%), won (8.5%), and yen (8.1%).<\/p>\n
A toll concept for the Strait of Hormuz discussed payments in CNY or cryptocurrency; at 100 vessels a day (36k a year) and a USD 2mn fee, totals reach USD 72bn or RMB 491bn. CIPS processed about RMB 180tn in 2025.<\/p>\n
The news of a US-Iran ceasefire has pushed the yuan significantly stronger, breaking the dollar-yuan pair through the 6.85 level. We are now updating our forecast to a new, lower band of 6.70-7.05 for the coming months. This shift reflects the currency\u2019s surprising resilience and the changing geopolitical landscape.<\/p>\n
The yuan has been a top performer against the dollar this year, appreciating over 2.3% year-to-date as of early April. This outpaces nearly all other Asian currencies, many of which weakened during the recent Middle East conflict. China\u2019s Q1 2026 export data, which showed a 7% year-on-year increase, continues to support a strong current account surplus and adds fundamental strength to the currency.<\/p>\n
Policymakers in Beijing appear comfortable with this appreciation, a change from their stance earlier in the year. The People’s Bank of China’s daily fixings have been mostly neutral through March and early April, signalling they will not fight this move lower in the USD\/CNY pair. This tolerance is likely a strategy to offset the cost of commodity imports, which became more expensive during the conflict.<\/p>\n
For derivative traders, this suggests positioning for further yuan strength is the primary strategy. The widening US-China two-year yield spread, which reached its highest point since February 2025 last month, failed to weaken the yuan. Now, with ceasefire news bringing expectations of a less aggressive Federal Reserve, that yield gap is set to narrow, removing a major headwind for the yuan.<\/p>\n
Considering our new year-end forecast of 6.75, traders could look at buying USD\/CNY put options with strike prices around 6.80 or 6.75, expiring in the third quarter. This provides a cost-effective way to profit from the expected downward trend while capping potential losses. Volatility has dropped since the ceasefire announcement, making options pricing more attractive now.<\/p>\n
However, the yuan may not outperform all currencies if a lasting peace holds. Currencies that were hit hard by the conflict, like the Korean won and the euro, could rebound more sharply against the dollar. Traders should therefore be cautious about being long the yuan against these currencies and might even consider relative value trades, such as buying the euro against the yuan (long EUR\/CNY).<\/p>\n
A key factor to watch is the behaviour of Chinese exporters, who have been holding large amounts of dollars offshore since 2025 due to higher US yields. Data from last month already hinted at an increase in corporate foreign exchange settlements. A sustained move lower in USD\/CNY could trigger a wave of these dollars coming back home, creating significant, pent-up buying pressure for the yuan.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US\u2013Iran ceasefire boosts yuan; USD\/CNY band lowered to 6.70\u20137.05, year-end forecast cut to 6.75.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44432","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44432","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44432"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44432\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44432"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44432"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}