SHANGHAI - China's yuan advanced slightly against the dollar ‍on Friday, ‍on track for a seven-week rising streak - the longest since 2020 - as ​investors headed into the weekend on a cautious note and were reluctant to make any ⁠large bets.

The gains were also limited by a persistently weak central bank guidance fix, as ⁠analysts expect ‌a gradual and choppy appreciation path ahead for the Chinese currency.

The onshore yuan was trading at 6.9832 per dollar at 0732 GMT, slightly ⁠stronger than Thursday's close.

Markets barely moved after China released the December consumer price index (CPI) report which showed a 0.8% rise year-on-year to a three-year high, official data showed on Friday, although the full-year rate slumped to the lowest ⁠in 16 years while producer deflation ​persisted.

The yuan's strong start to the year came after it rose more than 4% in 2025 - its ‍biggest annual gain since 2020 - underpinned by a broadly weaker dollar and a year-end rush by exporters ​for foreign exchange settlement.

"Looking ahead, we still expect a gradual and choppy CNY appreciation path, with the USD leg remaining the key driver," Goldman Sachs said in a report on Friday.

However, "recent policy communications signal a preference for a measured pace of appreciation," the bank said.

"This would imply limited total returns for long CNY positions to contain one-way expectations."

On Friday, the People's Bank of China set the midpoint rate at 7.0128 per dollar, nearly 300 pips weaker than Reuters estimate.

Setting a weaker benchmark fixing, ⁠around which the yuan is allowed to trade in ‌a 2% band, would slow the currency's appreciation.

He Wei, analyst at GavekalDragonomics, expected the yuan in 2026 to be "both stronger and more volatile against the dollar than it ‌was in ⁠2025".

"A significant appreciation in the effective exchange rate probably first requires a material pick-up ⁠in domestic demand." 

(Reporting by Shanghai Newsroom samuel.shen@tr.com Editing by Shri Navaratnam)