The Valuation Case for a Stronger CNY One of our highest conviction views in FX is that the Chinese Yuan (CNY) will outperform the appreciation embedded in forwards in 2026, supported by our economists' above-consensus forecast for export growth and the current account. Already this year, the CNY fixing has gradually but consistently moved lower, and has Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures ...

Core Insights - Chinese crypto investors are reevaluating their reliance on dollar-pegged stablecoins like USDT due to a significant appreciation of the offshore renminbi against the dollar, which has risen from 7.4 to 7.06 over the past six months, marking its strongest level in a year [1][3] - The depreciation of dollar-denominated assets in yuan terms has resulted in a 4.6% loss for Chinese investors converting back from USDT, highlighting the risks associated with stablecoin holdings in the current currency dynamics [2][5] - The dollar index has decreased nearly 10% this year, influenced by weak US employment data and aggressive Federal Reserve rate cuts, while China's stock market rally has attracted foreign capital, further strengthening the yuan [3][4] Currency Dynamics - China's trade settled in RMB has more than doubled from January to July, with increased corporate hedging boosting practical demand for the yuan beyond speculative interests [4] - Research from Goldman Sachs indicates that a 1% appreciation of the yuan correlates with a 3% gain in Chinese equities, suggesting a self-reinforcing cycle that could further elevate the currency [4] Regulatory Environment - Tighter regulations pose additional challenges for stablecoin users, as China's central bank and 13 ministries have identified stablecoins as a concern for anti-money laundering and foreign exchange oversight [6] - Recent warnings from the central bank classify stablecoins as virtual currencies without legal tender status, raising concerns about their potential use in illegal activities [7] - The USDT-to-RMB exchange rate has fallen below 7 in peer-to-peer markets, reflecting market pressures and regulatory risk premiums, with increased transaction fees and spreads [7]

Zambia’s annual inflation slowed to its lowest level since August 2023, as the sustained appreciation of the kwacha helped curb import costs https://t.co/rfC6ZPti7s ...

Zambia’s annual inflation cooled to its lowest level since November 2023 as currency appreciation helped curb the cost of imports https://t.co/j7RU0G4BzF ...

Taiwan has formed a task force to help exporters and small- and medium-sized enterprises mitigate the impact of the local dollar’s sharp appreciation, reflecting growing concern about a surging currency https://t.co/o4FY4OxaW8 ...

Zambia’s kwacha, Africa's second best performing currency, may be heading for a prolonged period of appreciation if its correlation with the copper price is restored, Citi says https://t.co/LP2iuEYkwT ...