Yuan: Analysts at Swiss bank UBS see significant potential for further strengthening of the Chinese currency and precious metals. Despite weak domestic demand in China, the yuan continues to reach multi-year highs, and silver is preparing to storm the level of$80 per ounce.
Chinese yuan: exports beat weak retail
An unusual feature of the current rally is that the yuan is rising despite China's slowing economy. UBS points to external factors as the main driver:
- In July, China's trade surplus amounted to an impressive$112 billion.
- Companies convert export earnings into local currency at a rate of about$37 billion per month. These dollar sales offset the decline in retail demand and domestic investment.
USD/CNY exchange rate forecast from UBS:
| Period | Forecast |
|---|---|
| December 2026 | 6,60 |
| March 2027 | 6,60 |
| June 2027 | 6,50 |
| September 2027 | 6,50 |
At the current rate of about 6.72, this means an additional decline in the pair by about3,3%by mid-2027 [sources=[your text]].
People's Bank of China hits the brakes
Beijing does not want the currency to strengthen too quickly to avoid harming exporters. The key control tool remains the daily rate fixation (“midpoint”). On Tuesday, the regulator set the point at6,7852, which is almost 633 points weaker than the Reuters market estimate (6.7219). This is the largest deviation towards weakening over the past six months. This is a clear signal for the market: chasing the growth of the yuan is now risky. However, the authorities will not object togradualstrengthening until it threatens exports.
Silver: The Number One Bullish Asset
If Beijing's strategy with the yuan looks cautious, then with silver, UBS analysts are extremely optimistic. Their technical conclusion is simple: “Silver is a bullish asset.”
The first intermediate growth goal at the level$67.43has already been achieved. Now the next levels are in turn:
- $71.64- the nearest barrier.
- $75.93- medium-term goal.
- $80.22- long-term guideline.
This scenario is confirmed by Bank of America, which also sees a path to$75per ounce after technical correction. The overall backdrop for precious metals is improving ahead of Fed Chairman Kevin Warsh's speech in Jackson Hole. As markets reassess the chances of policy tightening, gold has dipped slightly, but silver maintains strong momentum.
Bottom line: two different management scenarios
The approach of the Chinese authorities and the dynamics of the markets form an interesting picture:
- By yuan:Beijing is managing the process manually through rate-fixing, curbing buyer enthusiasm to protect factories.
- For silver:The market moves on pure buying impulse. UBS believes that reaching the level of $71.64 will open the way to the psychological mark of $80, as fundamental factors (weak dollar, geopolitical tensions) remain on the side of the metal.