The trend of the Chinese yuan is indeed worth watching: it broke above the 7.0 psychological level by the end of 2025, and this year—after the Spring Festival—it accelerated further. In just a few trading days, it surged by nearly 600 points, and market sentiment is clearly on the strong side. But can you buy the yuan now? I think this question needs to be considered from several angles.

First, let’s talk about the logic behind this round of appreciation. China’s trade surplus has reached a historical high, reaching about 1.2 trillion USD in 2025, up 20% from 2024. Entering 2026, this momentum continues: Q1 GDP also grew to 5.0%, higher than market expectations. The support from these fundamentals is indeed solid, attracting a number of foreign investors to reposition their yuan assets, and settlement/conversion demand has also increased. In addition, with the US dollar index overall weak, the yuan naturally has room to appreciate.

However, there’s something interesting here. On February 27, the central bank cut the risk reserve ratio for foreign exchange forward contracts from 20% to 0%. The purpose is to encourage companies to buy USD and slow down the pace of yuan appreciation. This move sends a very clear signal: the authorities do not want the exchange rate to appreciate excessively in one direction. So in the short term, the yuan’s appreciation pace may slow, and there’s a higher likelihood of the exchange rate consolidating in a range—expected to trade back and forth between 6.83 and 6.92.

From an institutional perspective, Goldman Sachs maintains a target price of 6.70 for the next 12 months, believing the yuan still has about 22% undervaluation remaining. HSBC sets its year-end target at 6.75. These forecasts all point to the view that the long-term yuan appreciation trend has not yet ended.

So, can you buy the yuan now? My view is that if you have a long-term holding need or want to hedge your USD exposure risk, then it does have allocation value. The key, however, is not to blindly chase the price higher. It’s recommended to take a phased approach to build positions, set take-profit and stop-loss levels, and closely monitor the central bank’s daily published midpoint rates and trade data. The second quarter is usually a period when companies’ demand for purchasing foreign currency is relatively higher, which can also put some pressure on the exchange rate.

In simple terms, the logic behind the yuan’s appreciation is still there, but in the short term, it definitely won’t just keep soaring upward in a straight line. Although market sentiment is relatively strong, the central bank’s policy fine-tuning is cooling down. At this time, phased positioning—buying gradually and watching closely—will be wiser than buying everything all at once. For investors who want to participate in this trend, patience and discipline are the most important.