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The central parity rate hits a new low, should you hold foreign currency during the holiday?

The central parity rate hits a new low, should you hold foreign currency during the holiday?

硅基星芒硅基星芒2026/02/09 23:58
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By:硅基星芒

Morning FX

As non-US currencies begin to recover, the RMB has re-entered its appreciation channel. Just yesterday, the USD/CNY central parity rate hit a new low since May 2023, at 6.9523, approaching the key 6.95 level.

The central parity rate hits a new low, should you hold foreign currency during the holiday? image 0

Chart: The pace of central parity rate adjustment is accelerating

If we calculate from the high point of last April’s trade war, the USD/CNY central parity rate has been declining for eight consecutive months. There was a period of sideways consolidation from September to November, but it eventually returned to a trajectory aligned with market appreciation rates. With the Spring Festival approaching, should you still hold foreign exchange through the holiday?

I. What is the pace of RMB appreciation?

RMB appreciation started to accelerate in December of last year. After appreciating about 900 pips in a single month, it continued to appreciate by 500 pips in January. Before the Spring Festival in February, companies concentrated on foreign exchange settlement, with trading volume surging during intraday appreciation, especially as forward settlements increased.

The central parity rate hits a new low, should you hold foreign currency during the holiday? image 1

Chart: Settlement volume surges during intraday appreciation

If one word were to summarize RMB’s appreciation characteristic, it would be “self-driven.” In this round of de-dollarization, the US Dollar Index fluctuated between 96-99. When the index fell, the RMB released appreciation momentum accordingly, and the USDCNY’s downward slope remained steady; when the index rose, the RMB only made minor adjustments, and USDCNY’s rebound was limited, mostly within 100 pips.

The central parity rate hits a new low, should you hold foreign currency during the holiday? image 2

Chart: RMB is less affected by the US Dollar Index

It is clear that settling foreign exchange at highs has become consensus, with companies abandoning rigid fixed positions in favor of flexibly following trends.

    II. Where are the risks before and after the holiday?

    First, supply and demand imbalance due to foreign exchange settlement before the Spring Festival. Although the RMB has already appreciated 300 pips in February, at the current pace of appreciation over the past two months, USDCNY could still fall to the 6.9 mark.This round has seen a collective rebound of non-US currencies, especially with the shadow currency AUD opening an upward trend and becoming the strongest currency, which has also increased the pressure for RMB appreciation.

    Second, key data catalysts. This Wednesday will see the release of the previously missing January non-farm payrolls, and CPI will be published on Friday. With both employment and inflation data concentrated in the same week—especially with Friday coinciding with the close of onshore markets—if the data disappoints, the RMB could face further appreciation risk during the Spring Festival’s period of weak liquidity.

    In addition, this year's Spring Festival holiday is a record-long nine days, which contains a 50 pips Carry return. There are also speculative Carry trades around Wednesday, which will increase volatility, and short-term options volatility is showing signs of a rebound.

    The central parity rate hits a new low, should you hold foreign currency during the holiday? image 3

    Chart: Volatility begins to rebound

    III. Summary

    (1) New lows for USD/CNY central parity, the US Dollar Index resumes its downward trend, and RMB appreciation momentum strengthens before the holiday.

    (2) Appreciation before the Spring Festival may not be over, with key data catalysts and Carry trades amplifying market volatility. Settling foreign exchange at highs and adjusting positions in line with the trend is a reasonable choice.


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    Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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