Is it time to buy RMB now? A comprehensive analysis of the 2026 RMB exchange rate trend and investment opportunities

By the end of 2025, the RMB successfully broke through the psychological threshold of 7.0, marking the official end of a three-year depreciation cycle. As we enter 2026, is this round of appreciation worth chasing? Is buying RMB really a good idea? To answer this question, we need to first understand the current market situation and future development directions.

The New RMB Appreciation Cycle Has Begun

In 2025, the USD/RMB exchange rate fluctuated within a broad range of 6.95 to 7.35, with a total appreciation of about 4% for the year. Especially in mid-December, driven by the Fed cutting interest rates and improved market sentiment, the RMB strengthened past the 7.05 mark and officially broke the 7.0 barrier on December 30, eventually reaching around 6.9623. This turning point signifies that the RMB has officially bid farewell to its depreciation trend since 2022 and entered a new medium- to long-term appreciation cycle.

Looking back at the twists and turns of the past year, the RMB faced multiple pressures in the first half. Uncertainty in global tariffs, the persistent strength of the US dollar index, and escalating US-China trade frictions once pushed offshore RMB below 7.40, even hitting a new record since the 2015 “8.11 reform.” However, in the second half, with progress in US-China trade negotiations, signs of easing bilateral relations, and a weakening dollar index, the RMB began to stabilize and appreciate gradually.

Against the backdrop of major non-US currencies like the euro and pound appreciating, the RMB also experienced moderate gains against the dollar, with market sentiment stabilizing. This shift is not just short-term volatility but reflects deeper economic and policy changes.

Three Core Factors Driving RMB Appreciation

To determine whether buying RMB is wise, we must understand the underlying factors supporting the appreciation. Market analysis generally agrees that three key forces will drive the RMB stronger:

Factor 1: China’s Export Resilience Continues

Despite complex external conditions, China’s export growth remains robust. This reflects the continued competitiveness of Chinese manufacturing and indicates stable actual demand for RMB in the international market. When Chinese goods occupy an important position in global trade, buying RMB is akin to betting on China’s outward economic momentum.

Factor 2: Repatriation of Foreign Capital into RMB Assets

After years of capital outflows, international investors are beginning to reassess the value of Chinese assets. As policies supporting steady growth take effect and China’s capital markets become more attractive, capital inflows are resuming. This capital movement directly boosts demand for RMB, providing a key support for appreciation.

Factor 3: Structural Weakening of the US Dollar Is Confirmed

In 2026, the Fed is expected to cut interest rates 2 to 3 times. As the labor market stabilizes, the Fed shifts focus to preventing a hard landing, and this preemptive rate cut weakens US bond yields’ attractiveness. Consequently, global capital gradually flows back from the dollar to emerging markets. The structural weakening of the dollar provides a rare window for RMB appreciation.

Key Supports and Risks for USD/RMB

Understanding the future trend of RMB requires attention to four variables affecting the dollar:

Future Space of the US Dollar Index

As of January 2026, the dollar index has retreated to 98.8–98.2, with the global de-dollarization trend and the Fed’s dovish stance offsetting short-term dollar rebound momentum. However, market expectations of US economic resilience remain, implying potential for dollar rebound, though downside space is limited.

Fragile Balance of US-China Economic and Trade Relations

Recent trade negotiations in Kuala Lumpur resulted in a ceasefire agreement. The US lowered tariffs on Chinese fentanyl-related goods from 20% to 10%, and the 24% retaliatory tariffs are suspended until November 2026. Both sides agreed to delay restrictions on rare earth exports and port fees, and to expand purchases of US soybeans and other agricultural products.

However, this balance remains fragile. Whether substantive improvement in US-China trade relations can continue into the second half of 2026 is a key external uncertainty for USD/RMB. If the status quo persists, RMB may stabilize; if tensions escalate, RMB will face renewed pressure.

Further Easing of Fed Policies

The Fed’s preemptive rate cuts weaken the dollar’s appeal, but policy shifts are uncertain. If US inflation rebounds, the Fed may slow or halt rate cuts, which would hinder RMB appreciation.

PBOC’s Policy Balance

The People’s Bank of China tends to maintain an accommodative monetary policy to support economic recovery, especially amid a sluggish property market. However, loose monetary policy often exerts downward pressure on the currency. The PBOC needs to balance growth support with exchange rate stability, and this policy coordination will directly influence RMB’s medium-term trend.

Consensus Among International Investment Banks on RMB Outlook

Several top global investment banks are optimistic about RMB prospects, providing strong support for buying RMB:

Deutsche Bank suggests that recent RMB strength against the dollar may signal the start of a long-term appreciation cycle. They project RMB/USD could rise further to around 6.7 in 2026.

Goldman Sachs is also bullish, with a target of 6.85 for RMB/USD in 2026.

If these forecasts are correct, moving from the current 6.96 to the 6.70–6.85 range implies a potential appreciation of 5%–9%.

When and How to Buy RMB: Strategies and Timing

The key question for investors is whether buying RMB can be profitable, which depends on timing.

Short-term Outlook

In the near term, RMB is expected to remain volatile but generally strong. After breaking the 7.0 psychological barrier at the end of 2025, the currency is currently closely tied to the dollar index, with strong support around 6.9. Since early 2026 has seen RMB stabilize below 7.0, the chance of a quick drop below 7.1 is low. The market is searching for a new equilibrium between 6.90 and 7.00.

Three Key Variables to Watch

Before buying RMB, investors should closely monitor:

1. Further USD Index Movements — Whether Fed rate cuts in 2026 will further weaken the dollar, affecting RMB upside potential.

2. Official Exchange Rate Signals — Whether regulators will use the daily midpoint or intervene to prevent rapid appreciation if RMB gains too quickly. Mild interventions may be employed to prevent excessive volatility.

3. Effectiveness of China’s Steady Growth Policies — The impact of 2026 growth-support measures on domestic demand and the stock market, which will directly determine the long-term support level for RMB.

Investment Recommendations

Regarding whether buying RMB is good, it depends on your investment horizon:

• Short-term traders (3–6 months): RMB has formed support around 6.90–7.00. Participation is possible, but set stop-loss orders above 6.85 to manage policy risks.

• Medium-term investors (6–12 months): Based on bank forecasts targeting 6.70–6.85, there are good opportunities. Consider phased entry and gradually increase RMB exposure.

• Long-term investors (over 1 year): RMB has entered an appreciation cycle with a positive outlook. Consider regular purchases of RMB assets or RMB-denominated Chinese bonds to participate in the appreciation.

Four Investment Frameworks for RMB Trend Judgment

Making decisions to buy RMB should be based on systematic understanding. These four frameworks can help investors continuously assess RMB movements:

1. People’s Bank of China Monetary Policy Direction

The PBOC’s policy adjustments directly influence money supply and exchange rates. Looser policies (rate cuts or reserve requirement reductions) tend to increase liquidity and weaken RMB; tightening policies (rate hikes or reserve increases) tend to strengthen RMB.

For example, in November 2014, the PBOC launched a loosening cycle, cutting loan rates six times and lowering reserve requirements significantly. During this period, USD/RMB rose from 6 to nearly 7.4, illustrating the long-term impact of monetary policy.

2. China’s Economic Data Performance

Stable economic growth attracts sustained foreign capital inflows, boosting RMB demand. Conversely, slowing growth suppresses inflows. Key indicators include:

• GDP — quarterly, reflecting macro conditions
• PMI — monthly, leading indicator for manufacturing and services
• CPI — monthly, inflation measure
• Urban Fixed Asset Investment — monthly, indicating economic vitality

3. US Dollar Index and Fed Policies

USD movements directly impact USD/RMB. Fed and ECB policies are central. For instance, in early 2017, strong European recovery and signals of tightening led to a 15% decline in the dollar index, with USD/RMB falling accordingly, showing high correlation.

4. Official Exchange Rate Policy Orientation

Since 1978 reform, RMB exchange rate management has evolved. The last major adjustment was on May 26, 2017, shifting to a “closing price + basket currency change + countercyclical factor” model, strengthening official guidance. While short-term influence is notable, long-term trends follow broader monetary market directions. Investors should monitor official signals and market forces interactively.

RMB Five-Year Trend Review

To judge whether buying RMB now is appropriate, understanding the past five years’ turning points is crucial:

2020: Fluctuated between 6.9–7.0 early in the year, hit 7.18 in May amid US-China tensions and pandemic. As China controlled COVID and economic recovery accelerated, coupled with Fed rate cuts to near zero, RMB rebounded to around 6.50 by year-end, appreciating about 6%.

2021: Export strength persisted, and the PBOC maintained steady policies. USD index remained low, with USD/RMB oscillating between 6.35–6.58, averaging about 6.45.

2022: A turning point year. Aggressive Fed rate hikes pushed USD index up sharply, with USD/RMB rising above 7.25, depreciating about 8%, the largest in recent years. China’s strict pandemic measures and property crisis also weighed on the economy.

2023: Economic recovery fell short, with ongoing property debt issues and subdued consumption. US rates remained high, USD index hovered 100–104, and RMB fluctuated between 6.83–7.35, ending near 7.1.

2024: USD weakened, and fiscal stimulus boosted confidence. USD/RMB rose from 7.1 to around 7.3 mid-year, with increased volatility.

2025: Broke above 7.0, signaling the start of an appreciation cycle.

This history clearly shows that the best time to buy RMB is often near the end of a depreciation cycle, when policy shifts and economic stabilization begin. Currently, we are at such a turning point.

The Significance of Offshore RMB (CNH)

Investors buying RMB should also understand the difference between onshore (CNY) and offshore (CNH) RMB.

CNH trades freely in international markets (Hong Kong, Singapore), reflecting global sentiment and capital flows without restrictions. CNY is subject to capital controls, with the PBOC guiding via daily midpoint and interventions. Therefore, CNH tends to be more volatile.

In 2025, despite multiple fluctuations, offshore RMB generally trended upward. Early in the year, US tariffs and dollar strength pushed CNH above 7.36. The PBOC responded with measures like issuing 60 billion yuan in offshore bonds to stabilize liquidity.

Recently, with easing US-China trade tensions, China’s steady growth policies, and market expectations of Fed rate cuts, CNH has strengthened significantly. On January 20, 2026, CNH/USD broke below 6.95, reaching a 14-month high.

Final Verdict: Is Now a Good Time to Buy RMB?

Based on the above analysis, buying RMB now is attractive, but with caveats:

Clear Supports: RMB has officially entered an appreciation cycle, with consensus among investment banks and three core supports (export resilience, foreign capital inflow, dollar weakening) solid.

Timing is relatively favorable: Moving from 6.96 toward the target range of 6.70–6.85 offers a potential 5%–9% appreciation. For medium-term investors willing to hold over six months, the risk-reward profile is reasonable.

Risks must not be ignored: US-China relations remain fragile; official policies need monitoring; dollar rebound risks persist. Investors should tailor strategies to their risk tolerance and avoid overly aggressive positions.

Layered approach recommended: Short-term traders can participate at support levels with stop-loss orders; medium-term investors can gradually build positions; long-term investors can steadily increase holdings, participating in the appreciation cycle.

In summary, buying RMB is not about chasing short-term spikes but engaging in a rational appreciation cycle supported by fundamentals. The key is to manage risks carefully, choose appropriate entry points, and size positions prudently.