The Rising Yuan: A Global Perspective on Its Strength and Future

The yuan has recently shown significant strength, with its offshore rate reaching a peak against the US dollar not seen in over a year. This movement has sparked predictions that the currency could rise to as high as 6.8 by 2026. As China advocates for broader global adoption, the yuan’s international significance continues to grow. This article delves into the yuan’s advancements, informed by an analysis from an expert in North Asia economic trends.

Assessing the Yuan’s Global Advancement

Over the past few years, the yuan has increasingly been utilized as a settlement currency in China’s international trade, a change attributed to the evolving geopolitical landscape. In the first three quarters of 2025, cross-border yuan settlements soared to 13 trillion yuan (approximately US$1.85 trillion), marking an 11% rise compared to the previous year and representing 39% of China’s total goods trade during this period. This figure is a remarkable fourfold increase from 2017, prior to the onset of the US-China trade tensions.

Despite these strides, the yuan’s broader influence on the global stage remains modest. The daily transactions processed through China’s Cross-Border Interbank Payment System average around 700 billion yuan (nearly US$100 billion). While this is substantial, it pales in comparison to the nearly US$2 trillion transacted daily through the USD-based Clearing House Interbank Payments System.

On the investment front, yuan-denominated debt issuance in international markets is still trailing behind major currencies. It currently comprises just 0.8% of the global market share, despite showing slight improvements.

When it comes to global reserves, data from the International Monetary Fund (IMF) highlighted in the Oxford Economics report indicates that the US dollar’s share dipped to 56.3% by the end of the second quarter of 2025, a decline from 58.9% in 2020. In contrast, the yuan’s share in global reserves also decreased slightly, from 2.3% to 2.1%.

Conclusion

As the yuan continues to strengthen and expand its reach in international trade and finance, its future may hold even greater potential. However, while substantial growth has occurred, significant barriers still exist before the yuan can rival the dominance of established global currencies like the US dollar.