The strengthening of the yuan prompts global central banks to actively reconsider the structure of their $13 trillion currency reserves. Regulators are reallocating free capital away from the US dollar, Japanese yen, pound sterling, Swiss franc, and both Australian and Canadian dollars. Since the summer of 2025, the yuan has appreciated by 6% against the People's Bank of China's base currency basket. The US dollar has weakened by 8% against the yuan, while the Japanese yen has slumped 21% against the Chinese currency.
Reliability amid strong exports
The yuan is increasingly serving as a safe-haven asset during periods of trade disputes and military conflicts in the Middle East. Investors are choosing China's currency despite strict government control over capital movement and the absence of a freely floating exchange rate. Trust in the yuan is bolstered by stable external trade: China's net monthly export income exceeds $100 billion. Additionally, the dollar/yuan pair firmly holds third place in the world by trading volume, following the euro and yen pairs.
Potential for new capital inflows
* Current shares in global reserves: The US dollar holds 57%, the euro represents 20%, while the British pound and Japanese yen account for 5% each.
* Positions of the yuan: Chinese assets comprise 2% of global reserves, comparable to those of Canada and Australia.
* Expansion prospects: Even a small redistribution of central bank portfolios will trigger a substantial influx of money into China's financial system and support further growth of the yuan's exchange rate.
