The yuan at its highest level in three years: what is happening
In the last week of February 2026, the offshore yuan broke through the 6.84 per US dollar barrier, reaching 6.8362 on February 26 — the strongest level since April 2023. The accumulated appreciation over the last 12 months amounts to 6.37%, according to Trading Economics data. In four consecutive sessions of gains, the Chinese currency consolidated a trend that had been emerging since the second half of 2025.
For those who follow the trade relationship between Brazil and China — Brazil's largest trade partner since 2009 — this currency movement is not just a technical detail. It changes import costs, export revenues, and the very balance of trade between the two countries.
Why the yuan is appreciating
Three factors converge to explain the strengthening of the renminbi in 2026.
Record trade surplus for China. In 2025, China recorded a trade surplus of US$ 1.189 trillion — an absolute record. Exports grew by 5.5% over the year, with a highlight on redirecting sales to the European Union and Southeast Asia after tariffs imposed by Washington. In December 2025 alone, the monthly surplus was US$ 114.1 billion, the seventh time in the year it exceeded the mark of US$ 100 billion. This enormous volume of dollars entering the Chinese economy through external trade pushes the yuan upwards.
Weakened US dollar. The dollar lost strength globally amidst uncertainty over US tariff policy. The Supreme Court's decision against previous emergency tariffs reduced the demand for dollars, while the Fed kept interest rates at 3.75% — below the 5.5% of mid-2023. The expectation of repayment of up to US$ 180 billion in previously charged tariffs added selling pressure on the American currency.
Capital flows and PBoC's exchange rate management. The People's Bank of China (PBoC) has been trying to contain the speed of appreciation. On February 26, the central bank set the reference rate (midpoint) at 6.9228 per dollar — 623 pips above the Reuters estimate, the largest deviation ever recorded. This means that Beijing is actively trying to curb appreciation, but the market is stronger than the intervention.
The Brazilian real in the same period
On the other side, the Brazilian real also strengthened. On February 26, 2026, the dollar was quoted at R$ 5.1258 — the lowest level since May 2024 and an appreciation of 12.25% of the real over the last 12 months. The Selic maintained at 15% by the Central Bank of Brazil created a huge interest rate differential compared to the US (3.75%), attracting carry trade flows to Brazilian assets.
Brazilian inflation in January was 4.44%, while Chinese inflation was only 0.2%. This inflation differential, combined with currency movements, creates a particular scenario for bilateral trade.
In January 2026, Brazilian exports to China increased by 17.4%, contributing to a trade surplus of US$ 4.34 billion in the month. What happens when both the yuan and the real appreciate against the dollar? The cross rate CNY/BRL becomes the determining factor — and that's where the story gets interesting for importers and exporters.
Impact on Brazilian imports from China
Brazil imported US$ 61.1 billion from China in 2024, according to data from the Ministry of Development, Industry, Trade, and Services. The main products include electronics, telecommunications components, solar panels, lithium batteries, industrial machinery, and chemical inputs.
With a stronger yuan, Chinese products become more expensive in dollars. A smartphone that cost US$ 200 when the exchange rate was 7.30 CNY/USD (mid-2024) now requires more dollars for the same amount of yuan at the factory. In practice, the 6.37% appreciation of the yuan over the last year translates into a proportional increase in import costs in dollars.
However, since the real also appreciated 12.25% against the dollar in the same period, the Brazilian importer who buys in dollars is partially protected. The net effect depends on which currency moved more — and in this case, the real gained more ground than the yuan. For the average Brazilian importer, the account still closes better than 12 months ago.
For those who operate directly in yuan — using the bilateral settlement infrastructure that Brazil and China have expanded in recent years — the equation is different. The appreciation of the yuan against the real can make direct purchases in renminbi more expensive, even if the dollar is cheaper.
Most affected sectors:
- Consumer Electronics: smartphones, laptops, and accessories from Shenzhen and Dongguan represent a significant portion of imports. Already tight margins come under additional pressure.
- Solar Energy: Chinese photovoltaic panels dominate the Brazilian market. The appreciation of the yuan may slow down the price drop that has driven solar adoption in recent years.
- Industrial Inputs: chemical products, special steel, and electronic components used by Brazilian industry become more expensive, pressuring production costs.
Commodity Exports: Soybeans, Iron Ore, and Oil
Brazil exports to China mainly commodities: soybeans, iron ore, and crude oil. In 2024, these three products accounted for more than 75% of Brazilian exports to the Asian country.
Soybeans. Brazil is China's largest soybean supplier, which imports about 100 million tons per year to feed its pig herd and produce oil. With a stronger yuan, Chinese buyers have more purchasing power in dollars, which can sustain or even raise international prices for the oilseed. For the Brazilian producer who receives in dollars and converts to reais, the combination of strong yuan + strong real creates a mixed scenario: dollar prices may rise, but each dollar is worth fewer reais.
Iron Ore. Vale and other Brazilian mining companies supply the essential input for Chinese steelmaking. The appreciation of the yuan reduces the effective cost of iron ore for Chinese steelmakers, which may stimulate larger purchases — especially if Beijing launches new stimulus packages for civil construction and infrastructure.
Oil. Petrobras and independent exporters sell increasing volumes of pre-salt oil to Chinese refineries. The dynamics are similar to soybeans: a strong yuan expands Chinese purchasing power, but oil prices depend more on geopolitical factors (such as US-Iran nuclear negotiations in Geneva) than on bilateral exchange rates.
The Brazilian trade surplus with China tends to benefit from a strong yuan in the short term, as China can buy more commodities with the same amount of renminbi. The 17.4% jump in Brazilian exports to China in January 2026 is consistent with this dynamic.
Brazil-China Currency Swap Agreements
Since 2013, Brazil and China have maintained a currency swap agreement that allows exchanging reais for yuan without going through the dollar. The agreement, renewed and expanded over the years, is estimated to be worth 190 billion yuan (about US$ 27 billion). In 2023, the Central Bank of Brazil and the PBoC reactivated and modernized this mechanism.
In practice, the swap allows Brazilian importers and exporters to settle transactions directly in yuan, reducing conversion costs and dependence on the dollar as an intermediary currency. The ICBC (Industrial and Commercial Bank of China), which has operated as a clearing bank in Brazil since 2019, facilitates these operations.
With the yuan appreciating, the incentive for Brazilian companies to maintain reserves in renminbi or negotiate contracts directly in the Chinese currency grows. Some meatpacking plants and soybean trading companies already operate partially in yuan, taking advantage of smaller spreads and faster settlement.
The volume of transactions in yuan in bilateral trade is still modest — estimated at less than 10% of the total — but the growth trend is clear. The infrastructure is in place; what is missing is scale and familiarity of the Brazilian business community with operations in the Chinese currency.
The BRICS angle and de-dollarization
The 2026 yuan appreciation gains geopolitical contours in the context of BRICS. With the expansion of the bloc in 2024 (including Saudi Arabia, Iran, United Arab Emirates, Egypt, and Ethiopia), the discussion about alternatives to the dollar in trade among members has moved out of the theoretical field.
The New Development Bank (NDB), headquartered in Shanghai and chaired by the Brazilian Dilma Rousseff until 2025, already issues bonds in yuan and local currencies. The proportion of NDB loans denominated in currencies other than the dollar increased from 22% in 2022 to over 30% in 2025.
China, as the largest economy in BRICS, promotes this agenda. The digital yuan (e-CNY), tested since 2020, already processes over US$ 250 billion in accumulated transactions within China. The possibility of using e-CNY in international transactions — a recurring topic in BRICS meetings — would add a technological layer to de-dollarization.
For Brazil, partial de-dollarization of trade with China would have concrete advantages: reduction of transaction costs (exchange spreads and correspondent bank fees in dollars), less exposure to dollar volatility, and diversification of international reserves. The Central Bank of Brazil already includes the yuan in its reserves — representing about 5.4% of the total in 2024.
However, there are risks. Concentrating exchange exposure in the yuan means relying on PBoC decisions, which, as we saw, intervenes heavily in the exchange rate. The setting of the reference rate 623 pips above expectations in February 2026 shows that Beijing does not hesitate to intervene in the market when it deems necessary.
What to expect in the coming months
Trading Economics projects USD/CNY at 6.89 by the end of the first quarter of 2026 and at 6.82 in 12 months. This suggests that the market expects a slight short-term correction followed by the continuation of the appreciation trend.
For the real, the projection is USD/BRL at 5.16 at the end of the quarter and 4.97 in 12 months — that is, the real should also continue strengthening, albeit at a slower pace than the yuan.
The PMI data for China, expected for the first week of March, will be the next catalyst. If they indicate industrial activity expansion, the yuan may gain even more strength, consolidating the trend. If they disappoint, the PBoC will have more arguments to loosen monetary policy — which would tend to weaken the yuan.
Indicators to monitor:
- Chinese industrial PMI (March): above 50 points signals expansion and supports the yuan.
- Copom decision (March): maintaining Selic at 15% keeps the real strong via carry trade.
- US-Iran nuclear negotiations: direct impact on oil prices and indirect impact on the dollar.
- US tariff policy: new Section 122 tariffs may redirect more Chinese trade to Brazil.
What this means for those doing business with China
If you import from China, the moment calls for redoubled attention to currency hedging. The volatility of the CNY/BRL pair is less covered by traditional financial instruments than USD/BRL, which requires more sophisticated operations — or acceptance of greater risk.
If you export commodities, a strong yuan is, overall, positive. Chinese buyers with appreciated currency tend to import more, and Brazil is a natural supplier of everything China needs: protein, ore, and energy.
If you are thinking about investing or doing business in the Chinese market, the appreciation of the yuan increases the cost of entry in real terms — but it also signals market confidence in the Chinese economy, which can be a positive indicator for the medium term.
Under any scenario, understanding the exchange rate dynamics between the yuan and the real has ceased to be an exclusive subject for treasurers and economists. With China accounting for more than 30% of Brazil's foreign trade, the bilateral exchange rate is a strategic variable for entire sectors of the economy.
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China to Watch covers daily the economic, commercial, and political developments of the Brazil-China relationship. If this article was useful, subscribe to our newsletter to receive analyses like this directly in your email — no spam, no filler, just what you need to know to make informed decisions.
