2026 RMB Exchange Rate Forecast: New Opportunities and Challenges After Breaking the 7.0 Barrier

The RMB has officially bid farewell to three years of continuous depreciation. By the end of 2025, the USD to RMB exchange rate successfully broke through the psychological 7.0 level, and is now stabilizing around 6.9, marking a new phase in the RMB exchange rate forecast. According to consensus among international investment banks, this round of appreciation has just begun, and the RMB is expected to further strengthen in 2026.

For investors, this moment is particularly critical. RMB exchange rate forecasts are no longer just academic discussions but are directly related to practical foreign exchange investment decisions. This article will analyze the latest market data, policy directions, and historical benchmarks to help readers understand the logic behind this turning point.

The RMB Appreciation Cycle Has Officially Started, Four Major Supporting Factors Are in Place

Throughout 2025, the broad fluctuation of USD/RMB (between 6.95 and 7.35) masked an important trend shift: the start of an RMB appreciation cycle. This is not a short-term rebound but a signal that the depreciation cycle beginning in 2022 has officially reversed.

Multiple factors support this judgment. First, China’s export resilience exceeded expectations, with full-year foreign trade data showing continued growth, providing sustained demand support for the RMB. Second, the trend of foreign capital reallocating into RMB assets is gradually establishing, with international investors’ attitudes toward China’s economic prospects quietly shifting. Third, the US dollar index has shifted from strength to weakness, falling from 109 at the start of the year to the current range of 98.2-98.8, marking the weakest first half since the 1970s. Fourth, the global de-dollarization trend offers a historic window for RMB internationalization.

The convergence of these four factors means the RMB is no longer passively responding to external pressures but actively entering a new medium- to long-term appreciation trajectory.

US-China Negotiations and Federal Reserve Easing: Dual Drivers for RMB Strengthening

The substantive improvement in US-China trade relations has been the immediate trigger for the rapid appreciation of the RMB. Although trade frictions still exist, the latest round of negotiations saw the US reduce tariffs related to fentanyl from 20% to 10%, and suspend reciprocal tariff increases until November 2026, with both sides agreeing to expand agricultural product purchases. This “trade ceasefire” consensus greatly alleviates market concerns about escalating US-China confrontation.

Simultaneously, the Federal Reserve’s policy shift provides a second driving force. Entering 2026, as the Fed officially begins a new easing cycle, markets expect 2-3 rate cuts throughout the year. The decline in US Treasury yields has lowered the attractiveness of dollar-denominated assets, prompting capital to flow back into emerging markets. As a relatively safe emerging market asset, the RMB has become a key target for inflows.

The combination of these two forces creates a dual engine for RMB appreciation. In the short term, as long as US-China trade negotiations do not experience major setbacks and the Fed continues easing, the RMB is likely to find a new equilibrium within the 6.9-7.0 range.

Will the RMB Still Rise in 2026? The Top Three Investor Concerns

First question: Will the US dollar index continue to weaken?

The dollar index has fallen from 109 at the start of the year to around 98.2-98.8, a decline of nearly 10%. There is room for further decline, but the pace may slow. The key is whether the Fed’s easing cycle proceeds as market expectations suggest. If inflation data unexpectedly rises or US economic resilience exceeds expectations, rate cut expectations could be revised upward, causing the dollar index to rebound accordingly. Therefore, short-term fluctuations of the dollar index around 98-100 are the most likely scenario.

Second question: What signals will the People’s Bank of China (PBOC) send around the 6.9 level?

The official stance near 6.9 is crucial. The central parity rate (which includes the countercyclical factor) often reflects regulatory intentions. If the PBOC aims to prevent rapid appreciation, it may send “buffer signals” through the central parity, implying the market should not chase gains excessively. This subtle policy orientation will temporarily constrain the exchange rate by about 20-50 basis points.

Third question: How far can China’s steady growth policies go?

This is the most uncertain factor. The stabilization of the real estate market, recovery of domestic demand, and stock market rebounds directly influence whether foreign capital continues to net inflow. If in the first half of 2026 China’s economic data remain below expectations, foreign investors may turn cautious again, weakening the RMB appreciation momentum.

According to mainstream international investment bank forecasts, in 2026, the RMB may test the 6.70 to 6.85 range. Deutsche Bank analysts believe the recent RMB strength against the dollar may signal the start of a long-term appreciation cycle, with a target of around 6.7 in 2026. Goldman Sachs is optimistic about the RMB’s prospects, expecting a target of 6.85 supported by policy measures.

How to Judge the Correct Direction of RMB Exchange Rate Forecasts? Four Investment Frameworks

Many investors focus on exchange rate trends but lack a systematic approach. The following four dimensions can help establish your own analytical framework.

First dimension: Central bank monetary policy stance

The People’s Bank of China’s monetary policy directly influences liquidity. Easing policies (rate cuts, reserve requirement reductions) tend to increase money supply and exert downward pressure on the RMB; tightening policies (rate hikes, reserve ratio increases) tend to support RMB appreciation. The 2014-2015 easing cycle, where the PBOC cut rates six times and lowered reserve requirements repeatedly, saw USD/RMB rise to 7.4, illustrating the profound impact of monetary policy. Monitoring the central bank’s policy inclination is the first step in predicting medium-term RMB trends.

Second dimension: Strength of China’s economic data

Strong economic data attract sustained foreign capital inflows, boosting demand for the RMB and supporting appreciation; weak data have the opposite effect. Key indicators include quarterly GDP growth, monthly PMI (official and Caixin), year-over-year CPI, and urban fixed asset investment growth. These indicators often lead exchange rate movements by 2-4 weeks and are important for early positioning.

Third dimension: Trend of the US dollar index

The USD index’s movement is highly correlated with USD/RMB. The main drivers are Fed policies and US economic outlook. For example, in early 2017, better-than-expected European recovery and signals of ECB tightening caused the euro to rise, pushing the USD index down by 15%, and USD/RMB also declined accordingly. Monitoring short-term support and resistance levels of the USD index helps assess the sustainability of RMB appreciation.

Fourth dimension: Official attitude toward exchange rate direction

Since 1978, China has undergone multiple exchange rate reforms. The 2017 improved central parity model incorporated the “countercyclical factor,” enhancing policy guidance. While this factor influences short-term movements, the medium- to long-term trend is driven by market supply and demand. Interpreting official statements, subtle adjustments in the central parity, and public comments from foreign exchange authorities can reveal policy preferences.

Historical Benchmarks: Five Years of Data Reveal RMB Cycle Patterns

Reviewing data from 2020 to 2024, we can identify the cyclical characteristics of the RMB exchange rate:

2020 was a year of pandemic shock. Early in the year, USD/RMB fluctuated between 6.9 and 7.0. In May, due to US-China tensions, it spiked above 7.18, but as China led global recovery and the Fed cut rates to near zero, the RMB rebounded strongly to around 6.50 by year-end, appreciating about 6%.

2021 continued the appreciation trend. Strong exports, steady monetary policy, and a low USD index kept USD/RMB in a narrow range of 6.35-6.58, averaging about 6.45, maintaining relative strength.

2022 marked the start of depreciation. Aggressive Fed rate hikes pushed the dollar index higher, China’s pandemic control issues and property crisis worsened, and USD/RMB rose above 7.25, depreciating roughly 8%, the largest decline in recent years.

2023 saw continued depreciation. The exchange rate fluctuated between 6.83 and 7.35, averaging around 7.0, ending at about 7.1. Slower economic recovery, unresolved property issues, and high US rates kept pressure on the RMB.

2024 showed signs of reversal. The dollar weakened, China announced fiscal stimulus and property support measures, and USD/RMB rose from 7.1 to around 7.3 mid-year. In August, foreign inflows pushed it below 7.10, with increased volatility signaling a new cycle.

2025 confirmed the appreciation cycle. The exchange rate fluctuated between 6.95 and 7.35, appreciating about 4%, and at the end of the year, broke through 7.0, stabilizing around 6.9.

This five-year data set clearly demonstrates a pattern: monetary policy cycles and economic cycles are the core drivers of exchange rate cycles, with USD trends acting as amplifiers. Understanding this pattern is crucial for predicting future RMB exchange rate movements.

Practical Advice: Is It Worth Investing in RMB-Related Currency Pairs Now?

In the short term, RMB has indeed moved out of passive depreciation and entered a new appreciation phase. However, this does not mean blindly chasing the rally. Key points for investors:

1. The 6.9-7.0 range is a critical pivot for RMB appreciation. It is both a psychological threshold and a major support level from years past. The market is seeking a new balance here. Short-term fluctuations are normal; avoid overbuying at highs.

2. Whether the USD index will further weaken below 98 and whether the Fed’s rate cut pace will proceed as expected will directly determine the sustainability of RMB appreciation. Investors should closely monitor Fed meeting minutes and US economic data.

3. Economic data in the first half of 2026, especially GDP, PMI, and consumption figures, will decide if foreign capital continues to net inflow. This is the fundamental support for long-term RMB appreciation.

4. The PBOC’s policy stance is also important. If the authorities send signals to prevent rapid appreciation through the central parity, short-term gains may be constrained.

Overall, investing in RMB-related currency pairs is feasible, but success depends on timing and risk management. Avoid chasing high; instead, consider accumulating positions during pullbacks near 7.0, set reasonable stop-loss levels (e.g., above 7.15), and stay alert to key events like Fed meetings and Chinese economic releases to avoid high volatility periods.

The core logic behind RMB exchange rate forecasts has shifted, but actual returns will be tested through market fluctuations. Grasping the big trend is essential; precise execution is the safeguard.