The Chinese yuan’s appeal may grow as an alternative to the yen for carry trades if the Bank of Japan makes further interest-rate hikes as widely expected, according to BBVA SA. Dariusz Kowalczyk, head of cross-asset strategy for Asia at the Spanish bank, stated, “I believe it’s worth watching the risk of the offshore yuan replacing the yen as the main Asian funding currency for carry trades.” The commentary reflects shifting market dynamics in global currency strategies as investors seek yield amid evolving monetary policy in Asia. BBVA’s analysis highlights the yuan’s potential to gain traction in carry trade funding, particularly if Japan continues tightening policy while China maintains relatively stable rates.

The observation underscores growing interest in renminbi-denominated assets as a hedge or substitute in cross-border investment flows.