The Chinese yuan is strengthening! Multiple experts say that two-way fluctuations remain the trend

Since 2026, the RMB exchange rate has been “rising consecutively.” In the week before the Spring Festival, both onshore and offshore RMB against the US dollar broke through the 6.9 mark. During the Spring Festival holiday from February 16 to 20, the offshore RMB against the US dollar increased by a total of 0.06%.

Experts say that the RMB’s strength against the US dollar is influenced by favorable external environment changes and increased corporate foreign exchange settlement demand. This year, the RMB exchange rate is likely to show a pattern of “fundamentals supporting, with market fluctuations in both directions.”

Foreign exchange settlement demand may be accelerating

During the Spring Festival holiday, the onshore RMB market was closed, and the offshore RMB against the US dollar generally appreciated. Data from Wind shows that from February 16 to 20, the offshore RMB appreciated by a total of 0.06% against the US dollar.

The recent rise in the RMB exchange rate is partly due to the accelerated release of foreign exchange settlement demand. Wang Qing, Chief Macroeconomist at Dongfang Jincheng, said that at the end of the year, increased corporate foreign exchange settlement demand led to seasonal strengthening of the RMB; especially after the RMB’s continuous appreciation against the dollar recently, the settlement demand may be accelerating.

“At the end of January this year, foreign exchange reserves increased by $41.2 billion compared to the end of December 2025, and the central bank has been increasing gold holdings for the 15th consecutive month, reinforcing market confidence in the stability of cross-border capital flows,” said Pang Ming, a senior researcher at the National Financial and Development Laboratory.

Changes in the external environment have also contributed to the RMB’s appreciation. Wang Qing noted that the Federal Reserve’s independence has been challenged, and the new Fed chair candidate’s “rate cut + balance sheet reduction” stance has not reversed the dollar’s weakness. Non-US currencies are generally appreciating, supporting the RMB’s strength.

Two-way fluctuations remain the trend

Several experts indicate that this year, the RMB exchange rate is likely to continue fluctuating in both directions with a moderate appreciation.

Wang Qing predicts that in the first quarter, China’s exports are expected to maintain relatively rapid growth, and corporate foreign exchange settlement demand before the Spring Festival may continue to be released. The possibility of a sharp rebound in the US dollar index in the short term is low, and the RMB is expected to remain relatively strong after the Spring Festival.

Considering multiple domestic and international factors, Guosheng Securities Chief Economist Xiong Yuan said that the domestic economy is generally growing steadily, and external risks are relatively controllable. He expects the RMB to trade within a range of 6.8 to 7.1 against the dollar, with an overall tendency to stabilize and appreciate.

Bank of China Securities’ Global Chief Economist Guan Tao stated that factors influencing the RMB exchange rate’s rise and fall coexist this year. While optimistic about the RMB, one should not ignore potential adjustments.

(Source: China Securities Journal)