ICICI Bank Forecasts Chinese Yuan Strength Against US Dollar

ICICI Bank projects the Chinese yuan will strengthen against the US dollar in the near term, forecasting the USD/CNY exchange rate to trade between 6.65 and 6.70. The bank attributes this stability and potential appreciation to foreign currency inflows fueled by a widening trade surplus and strong overseas demand for semiconductors, technology products, and advanced manufactured goods.

Data shows China's cumulative trade surplus reached 1.04 trillion USD for the first ten months of 2026. Although the October 2026 surplus narrowed to 105.5 billion USD following a 41.6 percent surge in imports, the overall trend remains supportive of the currency.

Potential limits to the yuan's growth include weak domestic demand and possible interventions by the People's Bank of China to protect export competitiveness. Additionally, the report identifies elevated US bond yields, renewed trade restrictions, and declining domestic confidence as primary risks to the currency's appreciation.