Yuan breaks 7-per-dollar mark as dollar weakens, boosting outlook for Korean won

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Yuan breaks 7-per-dollar mark as dollar weakens, boosting outlook for Korean won

Published: 27 Dec. 2025, 13:49 Updated: 28 Dec. 2025, 18:03

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

Banknotes of Chinese yuan and U.S. dollar are seen in this illustration. [REUTERS/YONHAP]

The Chinese yuan has surged past the “seven yuan per dollar” mark for the first time in 15 months amid a weaker U.S. dollar, potentially signaling gains for the Korean won, which often moves in step with the yuan.

The yuan traded at 6.9996 per dollar in China’s offshore market (CNH) on Dec. 25, a modest appreciation of 0.0048 yuan from the previous session.

This marked the first time the yuan has dipped below seven yuan per dollar since Sept. 27, 2023, when it stood at 6.9797. On Dec. 26, the currency continued to trade in the low 7-yuan range.

The yuan has gained roughly 4 percent against the dollar this year, even amid the U.S.-China tariff tensions, while the U.S. dollar index, which measures the greenback against six major currencies, has fallen about 7 percent over the same period.

China’s stock market has also benefited from the currency’s strength. The Shanghai Composite Index rose for an eighth consecutive session on Dec. 26, closing at 3,963.68, up 0.1 percent from the previous day.

“The yuan has been bolstered by weakness in the dollar and seasonal foreign-exchange conversion by exporters,” Wang Qing, chief macro analyst at Golden Credit Rating, told Bloomberg. “A sustained yuan gain will help increase the appeal of China’s capital markets to foreign investors.”

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China’s exports have been robust this year. China posted a merchandise trade surplus of $1.0759 trillion from January to November this year, surpassing $1 trillion for the first time, according to the General Administration of Customs.

The growth, which came despite tariff frictions with the United States, reflects increased exports to Asean and Europe, Shin Soong-woong, a researcher at Shinhan Investment, said.

China’s exports rose 5.3 percent this year through October, despite a 17.7 percent fall to the United States, according to data from the Korea International Trade Association.

After years of deliberately keeping the yuan weak to protect exporters, the Chinese government appears to be tolerating a stronger yuan, partly to reduce import costs and stimulate domestic consumption ahead of next year’s priority economic policies. The People’s Bank of China set the yuan at 7.0358 per dollar on Dec. 26, up 0.0034 yuan, or 0.05 percent, from the previous session.

Global investment banks also predicted the yuan’s strength to continue into next year. Lin Lily, Asian head of global markets research at Mitsubishi UFJ Financial Group, projected that U.S. rate cuts could weaken the dollar and support gains in the yuan and other Asian currencies, forecasting a yuan value of 6.95 per dollar by year-end 2025.

Goldman Sachs recently projected the yuan could reach 6.85 per dollar within a year.

The yuan's appreciation is also seen as a positive factor for the Korean won, which tends to move in tandem with China’s currency.

"Gains in the yen, yuan, and other Asian currencies have helped create favorable conditions for a stronger won," said Min Gyeong-won, a researcher at Woori Bank.

The won closed at 1,440.3 won per dollar in Seoul, up 9.5 won from the previous day, the highest level since Dec. 4, on Dec. 26, on the back of increased active market interventions by Korean authorities and a strengthening yuan.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY JANG SEO-YUN [[email protected]]