Chinese Yuan Gradually Strengthens on Trade Surplus

China's trade surplus is supporting a stronger Chinese Yuan, according to Commerzbank FX & Commodity Analyst Volkmar Baur. The bank expects USD/CNY to remain in a 6.75-6.80 range near term, with a gradual appreciation of the CNY against the US Dollar.

China's large trade surplus is driven increasingly by green technology exports, which are attracting significant foreign investment. As a result, large sums of foreign currency continue to flow into the country each month, seeking investment opportunities.

The stable performance of the CNY is likely to continue in the coming months, as this aligns with the Chinese government's wishes. For most of the past two and a half months, the USD/CNY exchange rate has moved sideways between 6.75 and 6.80.