HSBC Sees Yuan Hitting 6.65 by End-2026 as Dollar Weakens

HSBC's 6.65 target implies another 1.6% of yuan appreciation from current levels. That is not a dramatic move by historical standards – the pair traded below 6.40 as recently as early 2022 – but it would mark the yuan's strongest close since February of that year.

The risk to the forecast is a dollar that refuses to cooperate. If U.S. inflation stays sticky and the Fed holds rates higher for longer, the rate differential that HSBC is betting on would narrow or reverse. The yuan would then face the same headwind that hit every emerging-market currency in 2022 and most of 2023.

For now, the momentum is on the yuan's side. The pair has closed lower in six of the last eight weeks, and the 50-day moving average has crossed below the 200-day – a pattern that tends to draw in trend-following flows. HSBC's year-end target is not far from where the technicals point.

The next scheduled test is the PBOC's quarterly monetary policy report, due in the coming weeks. Any signal that Beijing is comfortable with further yuan strength would reinforce the HSBC view. A signal that it is not – perhaps through a weaker fixing or a surprise reserve-requirement cut – would put the 6.65 call on shakier ground.