A win for Democratic presidential nominee Joe Biden in the U.S. election next month could prove to be bullish for the Chinese yuan, analysts said.

A “balanced outlook” for the election “should reduce the risk premium” for the Chinese currency, analysts at Swiss bank Lombard Odier wrote in a report on Tuesday.

“We assume a Biden win that reduces some trading uncertainty,” they said. “Biden’s presidency could lead to a more rational approach to bilateral trade — even if his team could prove as hawkish on China as Trump’s on other matters.”

Under President Donald Trump’s administration, the U.S. and China have levied billions of dollars worth of tariffs on each other’s goods in a protracted trade dispute. Dropping those tariffs could lead to greater demand for Chinese goods and, correspondingly, the Chinese currency.

Republicans have largely embraced Trump’s “America First” agenda, abandoning traditional party goals such as unfettered trade. Biden has slammed the trade war with China — saying that tariffs have hurt American businesses and consumers. Still, he called for the U.S. to “get tough on China.”

The Lombard Odier analysts acknowledged the uncertainty, saying they have not assumed that a Biden presidency will automatically spell a rapid reduction in those tariffs on Chinese goods.

“However, if this were to occur, it would constitute a bullish CNY surprise,” they wrote, saying that the onshore yuan could potentially strengthen to 6.50 against the greenback.

The Chinese currency has already been soaring against the dollar in the last few months. Since May, the yuan has jumped more than 6% against the dollar.

Sim Moh Siong, a foreign exchange strategist at the Bank of Singapore, also told CNBC on Tuesday that there was still room for the yuan to appreciate further.

“The economy is bouncing back, the pandemic is brought under control. I think China’s broader recovery remains a bright spot relative to the slower growth in U.S. and Europe,” he said, predicting that the yuan could strengthen to 6.55 against the dollar in a year’s time.

One risk to the yuan, Lombard Odier wrote, would be a “collapse” of the phase one trade deal, which was signed by Beijing and Washington earlier this year.

“It could trigger the revival of tit-for-tat tariff disputes and China’s retaliation through a new yuan policy,” the analysts wrote.

Also, Sim noted that the People’s Bank of China has signaled recently that it might not be comfortable with the yuan’s current pace of appreciation.

Earlier this month, the central bank changed rules that made it cheaper for traders to short the yuan. Banks used to hold 20% of sales for some currency forward contracts, which essentially lock in the exchange rate for the sale of a currency on a future date. They no longer have to do so.

The central bank move appeared to be aimed at stabilizing the Chinese currency, according to its statement.