UBS Sees Dollar Falling to 6.50 Yuan as China's Export Machine Keeps Running
By Aboki Forex —
UBS expects the US dollar to weaken to 6.50 yuan by mid-2027, extending a run that has already taken USD/CNY more than 4% lower over the past year. The pair closed Friday near 6.7083.
The bank forecasts 6.60 for December 2026 and March 2027, then 6.50 in June and September. Hitting 6.50 would mean another 3.1% fall in USD/CNY, which is roughly a 3.2% appreciation in the yuan's value against the dollar.
Exports do the heavy lifting
Fresh Chinese trade figures back the case. Exports rose 25% year on year in dollar terms during August, helped by overseas demand for high-tech and AI-related products. Those receipts are a potential source of yuan buying whenever exporters convert foreign earnings, though the timing and size of those conversions matter.
Domestic prices tell a quieter story. The National Bureau of Statistics recorded annual consumer inflation of just 0.8% in August, with food prices still 1.4% below a year earlier. UBS forecasts Chinese growth of 4.5% this year and 4.6% in 2027, alongside average inflation of only 0.6% in both years.
Rate gaps still work against the yuan
The call sits alongside expectations for higher US policy rates by December and a small reduction in China's policy rate by June 2027. That leaves interest rate differentials working against the yuan over much of the forecast horizon.
So export-related flows, broader dollar weakness and continued policy tolerance have to carry more of the appreciation argument. The risk is that Beijing becomes less comfortable with currency strength if it starts squeezing exporters while domestic demand remains subdued.
What to watch
A move towards 6.60 would keep UBS's year-end forecast on course. Reaching 6.50 requires those supports to endure into 2027.
The forecast keeps the same path UBS laid out in its August analysis of the yuan, when export conversions and the People's Bank of China's tolerance for gradual appreciation were central to the argument.