Renminbi Trend Forecast 2026: Will it have a chance after breaking above 7.0?

After three consecutive years of depreciation from 2022 to 2024, the RMB achieved a critical turning point at the end of 2025. When the RMB officially broke through the psychological level of 7.0, should we reevaluate our future investment strategies? This article will deeply analyze the core logic behind RMB trend forecasts to help investors understand the true drivers behind this appreciation cycle.

Is the RMB entering an appreciation cycle? Current exchange rate trend analysis

2025 is a pivotal year for the RMB. The USD/RMB exchange rate fluctuated within a broad range of 6.95 to 7.35 throughout the year, appreciating about 4% overall, ending a three-year streak of depreciation.

Specifically, at the start of the year, the RMB faced multiple pressures. Global tariff uncertainties heightened risk aversion, with the dollar index rising strongly to 109, and offshore RMB temporarily falling below 7.40. This marked a new high since the 2015 “8.11” exchange rate reform, and market expectations of RMB depreciation intensified.

However, in the second half of the year, a turning point emerged. Substantive progress was made in China-U.S. trade negotiations, relations eased; meanwhile, the dollar index weakened from its peak. Amid a wave of de-dollarization worldwide, the RMB also began a gradual appreciation phase. By the end of 2025, the RMB successfully broke through the 7.0 mark, stabilizing around 6.96. This breakthrough was not a fleeting event but a structural shift driven by market expectation adjustments.

Four core factors determining RMB movement

To accurately forecast RMB trends, it’s essential to understand the deep drivers influencing exchange rates. These factors can be categorized into international environment and domestic conditions:

Structural change in the US dollar index

In 2025, the dollar’s trend showed a “V” shape: in the first half, it plummeted from 109 to 98—the weakest first half since the 1970s; after 2026, although it rebounded, it lost upward momentum, fluctuating between 98 and 99.

The underlying logic warrants close examination. The Federal Reserve expects 2-3 rate cuts in 2026, which diminishes US bond yields’ attractiveness, prompting capital to flow back into emerging markets. The long-term trend of de-dollarization, combined with the Fed’s shift from inflation fighting to hard-landing prevention, offsets the short-term rebound momentum of the dollar.

In simple terms, a moderate strengthening of the dollar may pressure the RMB, but the current structural weakness of the dollar index provides solid external support for the RMB to stay in the 6.x range.

The subtle balance of China-U.S. trade relations

By the end of 2025, China and the U.S. reached a key consensus during the latest trade talks in Kuala Lumpur. The U.S. agreed to reduce tariffs on Chinese goods related to fentanyl from 20% to 10%, and to suspend the 24% ad valorem tariffs until November 2026. They also agreed to delay restrictions on rare earth exports and port fees, and plan to expand purchases of U.S. agricultural products.

While these agreements represent a form of reconciliation, they also highlight fragility. Whether the substantive improvement in China-U.S. trade relations can continue into the second half of 2026 is the most critical external variable in RMB trend forecasts. Any renewed friction could reintroduce market pressure, and RMB depreciation remains a possibility.

The People’s Bank of China’s monetary policy stance

Against the backdrop of a sluggish real estate market and weak domestic demand, the PBOC tends to maintain an accommodative monetary policy to support economic recovery. Expectations of rate cuts or reserve requirement ratio reductions often exert short-term downward pressure on the currency.

However, if accommodative monetary policy is coupled with stronger fiscal stimulus that stabilizes the economy, the RMB’s attractiveness could improve in the long run. This reflects a paradoxical but crucial phenomenon: short-term easing may cause exchange rate pressure, but long-term economic stability will attract sustained foreign investment, ultimately boosting the RMB.

New trends in foreign capital allocation to RMB assets

The internationalization of the RMB is accelerating. With more countries signing currency swap agreements with China and increased use of RMB in global trade settlement, the RMB’s reserve currency status, while still subordinate to the dollar, is gaining appeal. Foreign investors are reassessing the value of RMB assets, which will be a key driver supporting exchange rate strength in 2026.

2026 RMB trend forecast: three main supports + institutional views

The market generally believes that the RMB is at a cyclical turning point. The depreciation cycle starting in 2022 may have ended, and the RMB could enter a new phase of medium- to long-term appreciation.

Three main factors support this view:

1. Resilience of China’s exports continues: Despite complex international conditions, China’s manufacturing sector remains a key part of global supply chains, maintaining steady export growth.

2. Foreign capital’s increasing focus on RMB assets: From equities and bonds to real estate, foreign investors are refocusing on China’s asset value.

3. Structural weakness of the dollar index persists: As discussed, Fed rate cut expectations and de-dollarization trends jointly limit the dollar’s sustained strength.

What is the consensus among international investment banks?

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

Goldman Sachs is even more optimistic. They believe that with policy support, the RMB exchange rate could target 6.85 in 2026.

These top-tier banks’ forecasts are largely aligned: the RMB’s trend is upward, with expectations of further appreciation to between 6.70 and 6.85 within the year.

Should you enter now? Three key variables to monitor

For investors eager to participate, timing is crucial.

In the short term, the RMB is expected to remain volatile but generally strong. Since breaking below 7.0 at the end of 2025, it has shown a deep correlation with the dollar index, with strong support around 6.9. Given it has stabilized below 7.0, the likelihood of falling back below 7.1 in the near term is low, and the market is seeking a new equilibrium between 6.90 and 7.00.

However, investment decisions should not rely solely on short-term fluctuations. The following three variables will directly influence your profit trajectory:

Variable 1: How much room does the dollar index have to fall?

Will the Fed’s 2026 rate cuts further weaken the dollar? If the dollar index drops below 98, it will open more room for RMB appreciation. Conversely, if the dollar re-stabilizes above 100, RMB gains will face significant headwinds.

Variable 2: Signals from regulators on exchange rate guidance

Will the PBOC use daily midpoint rate releases to signal caution against rapid RMB appreciation? This directly impacts short-term volatility and direction. If authorities worry that rapid appreciation could harm export competitiveness, they may adjust the midpoint rate accordingly, which traders should watch closely.

Variable 3: Effectiveness of China’s growth stabilization policies

Will China’s fiscal and monetary measures in 2026 effectively boost domestic demand and the stock market? This will influence foreign capital inflow expectations and determine the RMB’s long-term bottom.

Mastering these four points to understand the long-term logic of the RMB

Many investors focus on short-term trends but overlook a systematic approach to medium- and long-term RMB forecasts. The following four dimensions can help you build a correct analytical framework:

1. Transmission mechanism of the PBOC’s monetary policy

Monetary policy tightening or easing directly impacts money supply, which in turn influences the exchange rate. Rate cuts or reserve requirement ratio reductions tend to increase expected supply, leading to depreciation; tightening through rate hikes or reserve ratio increases tends to tighten liquidity and strengthen the currency.

From November 2014 to 2015, the PBOC cut rates six times and lowered reserve ratios significantly, during which USD/CNY rose from 6 to over 7.4. This historical episode vividly demonstrates the profound influence of monetary policy on exchange rates.

2. Economic data reflecting foreign investor confidence

When China’s economy grows steadily or outperforms other emerging markets, it attracts sustained foreign investment. Continuous net inflows translate into higher demand for RMB, pushing up the exchange rate.

Key economic indicators include:

• GDP (quarterly, reflecting macroeconomic health)
• PMI (monthly, measuring manufacturing and services activity)
• CPI (monthly, indicating inflation)
• Urban fixed asset investment (monthly, reflecting domestic demand strength)

3. The baseline role of global dollar trends

The dollar’s movement directly determines USD/RMB fluctuations. The Federal Reserve and ECB’s monetary policies are often key drivers.

For example, in 2017, the ECB signaled tightening, and with the eurozone’s better-than-expected recovery, the euro rose. During the same period, the dollar index fell 15%, and USD/CNY declined accordingly. This illustrates the high correlation between dollar trends and RMB exchange rates.

4. Official policy guidance on the exchange rate

Unlike freely floating currencies, the RMB’s exchange rate mechanism has undergone multiple reforms. Since May 2017, the RMB’s daily midpoint rate incorporates an “inverse cycle factor” to mitigate procyclical market behavior.

This means the authorities have a clear guiding role. Short-term adjustments to the midpoint often reflect explicit policy intentions, and the medium- to long-term trend depends on the overall direction of the currency market.

How has RMB appreciated or depreciated over the past five years? Cyclical patterns revealed

Reviewing RMB movements from 2020 to 2025, clear cyclical patterns emerge—an important reference for future forecasts.

2020: Appreciation reversal amid pandemic

Early in the year, USD/CNY fluctuated between 6.9 and 7.0. Mid-year, amid US-China trade tensions and COVID-19 impacts, RMB depreciated to over 7.18. But as China quickly contained the pandemic and led the recovery, coupled with the Fed’s near-zero rates and China’s steady policy, the interest rate differential supported RMB strength. By year-end, RMB rebounded to around 6.50, appreciating about 6% for the year.

2021: Steady growth in a high boom

China’s exports remained strong, and the economy was on a positive trajectory. The PBOC maintained a steady policy, while the dollar index stayed low. Throughout the year, USD/CNY fluctuated narrowly between 6.35 and 6.58, maintaining strength, with an average around 6.45—one of the more stable periods recently.

2022: Heavy blow from aggressive Fed rate hikes

The Fed’s aggressive rate hikes to combat high inflation caused the dollar to surge, pushing USD/CNY above 7.25 from 6.35, depreciating about 8%, the largest decline in recent years. Meanwhile, China’s strict COVID policies and a property crisis dampened economic confidence.

2023: Dual challenges of high rates and weak domestic demand

The US maintained high rates, with USD index between 100 and 104. RMB was under pressure, fluctuating between 6.83 and 7.35, ending around 7.1. China’s post-pandemic recovery fell short of expectations, and the property debt crisis persisted, with soft consumption.

2024: Policy stimulus offers rebound opportunities

The dollar weakened, easing RMB pressure. China introduced supportive measures for real estate and fiscal stimulus, restoring market confidence. USD/CNY rose from 7.1 to about 7.3 mid-year, with increased volatility. Offshore RMB even broke 7.10 in August, hitting a six-month high.

2025: Appreciation cycle officially begins

As previously mentioned, 2025 ended the three-year depreciation streak, and the RMB entered an appreciation phase, appreciating about 4%, opening a new chapter for future development.

Summary: A comprehensive approach to RMB trend forecasting

As China enters a sustained easing monetary policy cycle, the trend of USD/RMB has become more clearly defined. Based on historical experience, such policy cycles can last a decade, with short- to medium-term fluctuations driven by dollar movements and other events, but the overall direction remains relatively clear.

For investors, understanding the four key determinants outlined above can significantly improve the accuracy of RMB trend predictions. The forex market is primarily macroeconomic, with publicly available data from various countries. Coupled with the large trading volume and bidirectional trading, it remains a relatively fair and advantageous investment arena.

Regardless of market fluctuations, the logic behind RMB trend forecasts remains timeless. By grasping macro policies, economic data, dollar trends, and official guidance, you hold the key to understanding the medium- and long-term RMB trajectory.