Post by : Jyoti Gupta

The Chinese yuan is gaining strength as confidence grows in China’s economy and doubts rise about the future of the US dollar.

On Tuesday, China’s central bank set the official exchange rate at 7.1534 yuan to the dollar—the strongest level in nearly eight months. In June alone, the yuan rose by 0.41% against the dollar, pushing its total gains to 1.2% for the second quarter and 1.86% for the first half of the year.

This rise comes as economic data from China shows better results than many had expected earlier in the year. While exports remain weak, domestic demand has held up, easing worries about growth. Investors are also becoming more cautious about the US dollar, concerned about America’s growing debt and rising borrowing costs.

Because of this, some analysts believe the yuan could rise further—possibly going below the 7-per-dollar mark in the next six months, and even reaching 6.9 within a year.

The yuan had struggled earlier this year, falling to its lowest point at 7.3506 in April when trade tensions with the US escalated, leading to steep tariffs on both sides. But the currency began to recover after talks between the two countries resumed in London, calming market nerves.

Since then, the yuan has remained more stable. The difference between official and market exchange rates has narrowed, which means China’s central bank hasn’t had to step in as often to manage the currency. Analysts believe the yuan will likely stay in a relatively steady range for now.

Looking ahead, the yuan’s direction will depend on how China supports its domestic economy—especially consumer spending—and how trade talks with the US move forward.