Yuan to remain stable as investments flow in

China’s foreign exchange regulator expects the yuan to remain stable amid a flow of foreign capital into the mainland equity market.

Li Bin, the deputy head of the State Administration of Foreign Exchange, said at a briefing that in the first half of the year, the yuan strengthened 1.9 percent against the US dollar and expected the exchange rate to remain stable.

He said there were no "irrational" trading activities recorded at present.

China's onshore yuan foreign exchange market saw total trading volume reach US$21 trillion (HK$163.8 trillion) in the first half of 2025, up 10.2 percent year-on-year, underscoring deepening liquidity in the world's second-largest economy, he said

The onshore yuan closed at a week high yesterday, 12 basis points higher at 7.1756 per US dollar.

Jia Ning, director general of the balance of payments department at SAFE, citing an International Monetary Fund survey of 75 monetary authorities, said 30 percent of central banks worldwide intend to increase their holdings of yuan-denominated assets.

He said the yuan has become an attractive option for risk diversification and yield enhancement under financial market volatility, citing the currency’s advantages such as stability and its "distinct return profile."

Jia said foreign investment in yuan-denominated assets has stabilized in 2025.

Overseas investors now hold over US$600 billion in onshore yuan bonds, maintaining positions close to peak levels.

The equity market saw a turnaround with US$10.1 billion in net foreign inflows during the first half - including a strong US$18.8 billion inflow in May-June alone - after two years of net divestment.

He attributed the recovery to China's economic stabilization and the yuan's relative yield appeal, noting "foreign allocation to yuan assets has entered a more stable phase." 

CICI CAO