Rabobank’s report focuses on the Chinese Renminbi’s strengthening against the US Dollar, attributed to China’s push to internationalise its currency. This development is tied to Xi Jinping’s aspirations for the Renminbi to achieve global reserve currency status, with potential implications for the Dollar.
Since Liberation Day last year, the Renminbi has been steadily gaining strength against the Dollar. The People’s Bank of China has been implementing stronger daily fixings since late November. China’s use of its market power in commodities, such as iron ore, has facilitated wider acceptance of the Renminbi for trade settlement.
The Triffin Dilemma and the Renminbi
The Renminbi still faces hurdles in becoming a global reserve currency due to the Triffin Dilemma. This is exacerbated by China’s insistence on maintaining trade surpluses. Although unlikely, a genuine threat to the Dollar’s reserve status could impact the United States’ economic policy flexibility.
This article is informed by market observations from experts and features additional insights from FXStreet’s analysts. The analysis reflects ongoing evaluations and perspectives from both commercial and independent sources, enhanced by Artificial Intelligence contributions.
Looking back to early 2025, we saw the beginning of a deliberate push to strengthen the renminbi. This trend has not only continued but solidified throughout the past year, with the PBOC consistently guiding the currency stronger through its daily fixings. The USD/CNY pair broke below the key 7.00 level in the fourth quarter and is now trading near 6.90.
Commodity Trades in Renminbi
This policy supports the broader goal of internationalization, which we’ve seen reflected in the latest SWIFT data showing the CNY’s share of global payments reaching a record 4.8% in December 2025. This is up considerably from the 4.5% level seen at the end of 2024, confirming a steady increase in adoption. The central bank’s firm grip signals this managed appreciation will remain the default policy.
The move to settle commodity trades in renminbi, once a theory, is now a reality we are trading. For instance, major iron ore shipments from Brazil have increasingly been settled in CNY since mid-2025, a direct challenge to the dollar’s dominance in raw materials. This structural shift adds a persistent bid for the yuan that is independent of traditional capital flows.
For the coming weeks, this steady, managed appreciation suggests selling short-dated USD/CNY call options to collect premium could be a viable strategy. The central bank’s actions are likely to cap any significant upside moves in the pair, reducing the risk of these options finishing in the money. This strategy profits from both time decay and the lack of upward volatility.
However, implied volatility has been historically low, making long positions in CNH put options an attractive hedge or a low-cost directional bet on further yuan strength. Any unexpected sign of economic weakness from China ahead of the National People’s Congress in March could force a policy reversal, causing a sharp spike in volatility. These puts offer a defined-risk way to position for a surprise devaluation or simply a faster pace of appreciation.
