Yuan gains about 0.1% to 6.8954 per dollar, its strongest since May 2023
TL;DR
The Chinese yuan strengthened to 6.8954 per dollar, its highest level since May 2023, driven by policy shifts reducing U.S. Treasury holdings and a weaker dollar amid global uncertainty.
Yuan gains about 0.1% to 6.8954 per dollar, its strongest since May 2023
Yuan Hits Strongest Level Since May 2023 Amid Shift in Currency Strategy
The Chinese yuan rose to 6.8954 per U.S. dollar on February 23, 2026, marking its strongest level since May 2023, driven by a combination of policy adjustments and broader market dynamics. This appreciation follows reports that Chinese authorities have directed banks to reduce holdings of U.S. Treasuries, signaling a strategic pivot away from dollar assets and bolstering confidence in the yuan.
The move aligns with the People's Bank of China's (PBOC) growing tolerance for a stronger yuan, which has allowed the currency to appreciate steadily amid global uncertainty. Onshore and offshore yuan rates have surged to their strongest levels in over two years, with the PBOC setting the daily fixing rate at 6.9438 per dollar—the highest in 33 months—on February 20, 2026. Analysts attribute the yuan's strength to a weaker U.S. dollar, fueled by concerns over fiscal and trade policy volatility under the Trump administration and doubts about the Federal Reserve's long-term stability.
The directive to curtail U.S. Treasury holdings, while not imposing strict targets, has reinforced a broader trend of de-dollarization. By encouraging capital repatriation into Chinese assets, the policy supports the yuan's valuation and may accelerate global diversification into alternative currencies. Mark Cranfield, Markets Live strategist, noted that such messaging could influence investors in Europe and Asia to rebalance portfolios away from dollar-dominated assets.
Chris Weston of Pepperstone Group highlighted the PBOC's shift from maintaining a stable exchange rate to tolerating a stronger yuan, which has provided tailwinds for pro-cyclical currencies and China-linked assets. While the yuan remains fundamentally undervalued, its recent trajectory reflects both structural policy changes and external pressures on the U.S. dollar.
The yuan's gains underscore a potential long-term realignment in global currency dynamics, with President Xi Jinping's vision of a "powerful currency" further reinforcing investor sentiment. As the U.S. faces scrutiny over debt sustainability and policy coherence, the yuan's role in international markets may continue to evolve.
