(10 November 2026 – China) As the Chinese Renminbi (RMB) continues to appreciate in value economists warn recent PBoC interventions must be managed carefully as reserve currency ambitions are weighed against export competitiveness.
Peter Shadbolt reports for Finance Asia that while a stronger Chinese currency is viewed as an indicator of economic strength, resurgent strength in the currency presents as a major predicament.
The currency’s strength reflects the country’s substantial trade surplus and growing demand for the RMB, underpinning Beijing’s long-term ambition to unseat US Dollar hegemony as the world’s preferred international reserve currency. However that same strength threatens to undermine export competitiveness on which much of China’s economic growth still relies.
“The direct impact of the reserve requirement increase would be relatively modest, absorbing approximately US$24 billion in foreign-currency liquidity from an onshore deposit base of US$1.2 trillion. But the signalling impact is more important. The measure indicated the recent pace of Renminbi appreciation is considered too rapid and market positioning too one-way” stated Standard Chartered Head of Greater China Macro Strategy, Becky Liu.
“The build-up of crowded positions has historically been among the biggest catalysts for the PBOC to deploy counter-cyclical measures. It won’t be sufficient to alter the fundamental flows such as exporter FX conversion and cross-border investments, but it will be useful to reduce speculative positioning” she added.
Standard Chartered forecasts the USD/RMB to trade at 6.65 by the end of 2026 and strengthen beyond 6.50 in 2027.