Goldman Sachs sees USD/CNY at 6.40 in 12 months, implying about 4.6% Yuan appreciation from Friday's 6.6924 close. MUFG expects further near-term Yuan gains against the Euro.
EUR/CNY has already fallen about 10% from its January high, giving MUFG a near-term basis for expecting further Yuan gains against the Euro. Derek Halpenny, MUFG's head of global markets research for EMEA and international securities, says recent People's Bank of China fixings point to a preference for gradual Yuan strengthening, despite broader gains in the US Dollar. He also sees potential new EU tariffs on Chinese goods and import restrictions as risks to the Euro. Signs of resilience in the European economy could help stabilise the currency.
Goldman Sachs has a separate forecast for the Dollar-Yuan rate. It sees USD/CNY at 6.40 over the next 12 months, against a Friday close of around 6.6924. BNP Paribas Wealth Management set a 12-month target of 6.60 and a three-month target of 6.70 in its October currency outlook. The bank cited demand for Yuan-denominated assets and the currency's wider international use as support for the Renminbi. Its October currency outlook also describes the PBoC's gradual approach to the exchange rate.
How the currency pairs connect
The forecasts cover different currency pairs and time frames. A lower USD/CNY rate means fewer Yuan are needed to buy one Dollar, indicating Yuan appreciation against the Dollar. MUFG's view concerns EUR/CNY: a further decline would mean the Yuan strengthening against the Euro.
The cross-rate can move even if USD/CNY barely shifts. If the Yuan holds relatively steady against the Dollar while the Euro weakens, each Euro buys fewer Yuan. That can lift the Yuan against the Euro without a sharp fall in the Dollar-Yuan rate.
Recent PBoC fixings sit at the centre of MUFG's assessment. On 13 October, the central bank set its midpoint at 6.7298, the strongest fixing since 2 February 2023. The onshore Yuan traded around 6.6972 per Dollar, near its strongest level since 16 January 2023.
The midpoint was 6.7249 on 14 October, down from 6.7298. On 15 October, it edged weaker to 6.7253. Onshore trading is allowed within a band of 2% on either side of the daily fixing. The official fixings came in weaker than Reuters market estimates on the cited sessions, even as the Yuan traded near multi-year highs.
On 8 October, the PBoC said China does not target a particular exchange-rate level or seek competitive devaluation. It described the Yuan as operating under a managed floating regime based on supply and demand. The rate is adjusted with reference to a basket of currencies.
The central bank said regular foreign-exchange intervention had ended after 2017, while authorities retained the ability to counter sharp short-term fluctuations. The statement came as China's trade surplus faced scrutiny and claims circulated that the currency was being held artificially low. The next day, the Yuan reached a roughly four-year high against a basket of trading partners. The PBoC also set its strongest fixing since 2023. The central bank's position was reported by Tribune.
On 13 October, analysts at China Securities cited by Reuters expected moderate Yuan appreciation through year-end, putting USD/CNY around 6.6 to 6.7. BNP Paribas's 12-month target of 6.60 falls within that range. Goldman Sachs's 6.40 projection points to a lower Dollar-Yuan rate over the same 12-month horizon.
Dollar strength across Asia
Halpenny's comparison shows a gap between the broad Dollar and Asian currencies. The DXY has risen 3.3% from its September low. The Dollar against a basket of Asian currencies is up 0.7%. The indexes cover different baskets, so the figures are not directly interchangeable. Together, they show that Dollar gains have not translated into uniform weakness across the region.
A separate China data preview examined how inflation and trade releases could test the Yuan's resilience. Goldman's forecast also distinguishes external strength from China's domestic picture. The bank expects real GDP growth of 4.5% year on year in 2026, supported by broad-based exports but constrained by weak domestic demand.
Trade remains unresolved
Currency strength has not eased European concerns about Chinese competitiveness. Before Friday's talks concluded, Halpenny referred to discussions between Trade Commissioner Maros Sefcovic and Chinese Commerce Minister Wang Wentao. He also pointed to a PBoC document defending China's foreign-exchange policy. The document argued against treating the Yuan's level as the cause of China's large trade surplus.
After the negotiations, EU trade commissioner Maroš Šefčovič described an understanding covering Chinese hybrid-car exports and access for European goods. It also addressed export licensing for critical materials. The package still needed endorsement by EU leaders, leaving implementation unresolved. The understanding reduced the immediate relevance of a breakdown scenario, but it did not settle the wider dispute over China's trade surplus or create a new exchange-rate agreement.
Halpenny regards the Yuan as undervalued, though he notes that the scale is debated and exchange rates explain only part of China's export strength. MUFG also identifies France's fiscal problems as a weight on the Euro. Higher refined-energy prices pose a risk for European economies, particularly if natural-gas and diesel prices rise further. The bank also cites signs of economic resilience in Europe that could help stabilise the Euro at lower levels.
