USD to RMB exchange rate trend: Strengthening appreciation expectations in 2026

The current market generally expects the renminbi to perform well, with many international investment banks raising their forecasts for the appreciation of the USD against the RMB. From Deutsche Bank and Morgan Stanley to Goldman Sachs, these authoritative institutions’ latest assessments all point to a common conclusion: the depreciation cycle that began in 2022 is reversing, and the RMB is likely to enter a medium- to long-term appreciation trend. This shift is driven by deep economic and policy logic that investors should understand thoroughly.

International Investment Banks Optimistic About RMB Appreciation, USD/RMB Exchange Rate Faces Turning Point

Recent forecasts from multiple authoritative institutions provide strong support for RMB appreciation. Deutsche Bank analysts note that the recent strengthening trend of the RMB against the USD may indicate the start of a long-term appreciation cycle. They estimate that the USD/RMB exchange rate will fall to 7.0 by the end of 2025 and further to 6.7 by the end of 2026.

Morgan Stanley’s outlook is even clearer, expecting the RMB to show a modest appreciation and predicting the USD will weaken further over the next two years. According to their forecast, by 2026, the dollar index could fall back to around 89, with the USD/RMB exchange rate possibly reaching about 7.05.

Goldman Sachs’ view is particularly noteworthy. Kamakshya Trivedi, head of Goldman Sachs’ Global FX Strategy, significantly revised upward their forecast in May, adjusting the expected USD/RMB rate over the next 12 months from 7.35 to 7.0, and suggesting that the “breaking 7” point for the RMB could arrive sooner than the market expects. Goldman Sachs’ logic is that the current real effective exchange rate of the RMB is undervalued by 12% relative to its 10-year average, with an even more significant undervaluation against the USD at 15%.

Based on positive progress in US-China trade negotiations and the current undervaluation of the RMB, Goldman Sachs expects the RMB to appreciate to 7.0 against the USD within the next 12 months. The firm also believes that China’s strong export performance will support the RMB, and that the Chinese government is more likely to use other policy tools to boost the economy rather than devalue the currency. They provide more specific target prices: 7.2 in three months and 7.1 in six months.

RMB Appreciation Cycle: Five-Year Exchange Rate Review and Turning Point Analysis

To understand the significance of the current USD/RMB trend, it is essential to review the market changes over the past five years. This history clearly outlines a complete cycle of RMB appreciation, depreciation, and rebound.

2020’s rapid rebound phase: In early 2020, USD/RMB fluctuated between 6.9 and 7.0. Amid US-China trade tensions and pandemic shocks, the RMB depreciated to 7.18 in May. However, as China quickly controlled the pandemic and led an economic recovery, coupled with the Fed cutting rates to near zero and China maintaining prudent monetary policy, the interest rate differential supported RMB appreciation. This policy divergence drove the RMB to rebound strongly to around 6.50 by year-end, gaining about 6% for the year.

2021’s high-level consolidation: China’s exports remained strong, and the economy performed well. The People’s Bank of China maintained a stable monetary stance, while the USD index stayed low. During this period, USD/RMB fluctuated narrowly between 6.35 and 6.58, averaging about 6.45 for the year, with the RMB remaining relatively strong.

2022’s sharp depreciation: This was the most volatile year in five. USD/RMB rose from 6.35 to over 7.25, depreciating about 8%, the largest decline in recent years. The fundamental causes were aggressive Fed rate hikes boosting the dollar index and China’s strict pandemic controls dragging down the economy, along with a worsening real estate crisis and declining market confidence.

2023’s continued depreciation: USD/RMB ranged from 6.83 to 7.35, averaging about 7.0, ending the year slightly higher at around 7.1. During this period, China’s economic recovery post-pandemic was weaker than expected, the real estate debt crisis persisted, and domestic demand remained sluggish. Meanwhile, the US maintained high interest rates, with the dollar index oscillating between 100 and 104, keeping the RMB under pressure.

2024’s volatility and initial turning point: The dollar’s weakening began easing RMB pressure, supported by China’s fiscal stimulus and real estate policies boosting market confidence. In 2024, USD/RMB rose from 7.1 to around 7.3 mid-year, with offshore RMB breaking below 7.10 in August, reaching a semi-annual high, and overall volatility increasing significantly.

Looking at these five years, 2022 was a decisive turning point. Since then, although the RMB has remained in a depreciation trend, signs of rebound have become more evident, laying the groundwork for the current appreciation cycle.

2025 RMB Outlook and Turning Point Characteristics

2025 is a critical year for the RMB exchange rate. The USD/RMB will likely fluctuate between 7.1 and 7.3, showing resilience, with an overall appreciation of about 2.4%. This marks a break from the three-year trend of USD depreciation from 2022 to 2024, representing an important turning point.

In the offshore market, USD/ offshore RMB fluctuated between 7.1 and 7.4, with a cumulative appreciation of 2.8%, slightly outperforming the onshore market. This reflects the offshore RMB’s greater sensitivity to international macro factors, and the divergence between the two markets warrants attention.

By late November 2025, driven by improved US-China trade relations and expectations of Fed rate cuts, the RMB’s appreciation momentum intensified, with the exchange rate briefly falling below 7.08 and even touching 7.0765, hitting a one-year high. This technical breakthrough indicates the market is digesting the accumulated appreciation expectations.

In the first half of 2025, pressures arose from increased global tariff uncertainties and a strengthening dollar index. Offshore RMB temporarily broke below 7.40, and USD/RMB hit levels not seen since 2022, even reaching new highs since the 2015 “8.11” reform. This phase vividly illustrates the market’s bearish outlook on the RMB.

The turning point occurred in the second half, as US-China trade negotiations progressed steadily, relations eased, and the dollar index shifted from strength to weakness. RMB exchange rates stabilized and began to appreciate gradually. Against the backdrop of a general strengthening of major non-US currencies like the euro and pound, the RMB also entered a modest appreciation phase, with market sentiment stabilizing.

2026: Four Core Factors Influencing USD/RMB Exchange Rate

The future trajectory of USD/RMB depends on multiple intertwined factors, both external and domestic.

The evolution of the dollar index remains the primary focus. In the first five months of 2025, the dollar index plummeted 9%, marking the worst start to a year historically. Market consensus suggests that the Fed’s upcoming rate cuts will lead to lower short-term rates, potentially further weakening the dollar over the next 12 months. This trend would support the continued appreciation of Asian currencies, including the RMB.

US-China relations and trade policies are key variables. Although recent talks in London have seen a thaw, the durability of this détente remains uncertain. Past agreements, such as the May Geneva deal, have quickly unraveled, indicating ongoing risks of volatility. If negotiations succeed and tariffs ease, the RMB could benefit; if tensions escalate, depreciation pressures will persist.

The Fed’s policy adjustments will influence short-term fluctuations. While the Fed signaled rate cuts in late 2024, the magnitude and pace in 2025 will depend on inflation, employment data, and political factors. Persistent inflation may slow or halt rate cuts, supporting the dollar; economic slowdown could accelerate easing, weakening the dollar. The RMB and dollar index often move inversely.

The People’s Bank of China’s policy stance is equally critical. The PBOC tends to maintain an accommodative stance to support economic recovery, especially amid weak real estate and sluggish domestic demand. It may lower interest rates or reserve requirements, exerting downward pressure on the RMB. Conversely, if monetary easing is combined with stronger fiscal stimulus and economic stabilization, the RMB could strengthen long-term. Accelerating RMB internationalization, such as increased use in global trade settlement and currency swap agreements, may also support the RMB’s stability over the medium to long term.

Is Investing in RMB Appreciation Worth It? Timing and Opportunities

Given the current outlook, investing in RMB-related currency pairs can be profitable, but timing is crucial. The RMB is expected to remain relatively strong in the short term, with limited fluctuations and a tendency to move inversely to the USD.

Based on current market conditions, the rapid appreciation of the RMB below 7.0 before the end of 2025 is unlikely. Investors should prepare for medium-term holdings rather than expecting quick gains. Key factors to monitor include: the specific trajectory of the dollar index, signals from the RMB central parity rate, and the strength and pace of China’s stabilizing policies.

Four Key Methods to Assess RMB Exchange Rate Trends

It’s better to learn how to analyze the market yourself than to rely solely on others’ opinions. Regardless of market volatility, investors can evaluate USD/RMB trends through these four aspects:

1. Track PBOC monetary policy changes: As China’s central bank, the PBOC’s decisions directly influence money supply and liquidity, which in turn affect the exchange rate. Looser policies (rate cuts, reserve requirement reductions) tend to weaken the RMB; tighter policies (rate hikes, reserve increases) support RMB strength. For example, starting in November 2014, the PBOC eased monetary policy multiple times, lowering rates and reserve ratios, which contributed to the RMB’s depreciation from around 6 to nearly 7.4 against the dollar.

2. Monitor China’s economic data: Stable or outperforming economic indicators attract foreign investment and increase RMB demand, supporting appreciation. Conversely, slowing growth or reduced attractiveness weaken demand. Key data include:

• GDP growth rates
• PMI (Purchasing Managers’ Index)
• CPI (Consumer Price Index)
• Fixed asset investment

3. Observe USD trends and drivers: The dollar’s movements, influenced by Fed and ECB policies, directly impact USD/RMB. For example, in early 2017, strong Eurozone recovery and signals of tightening by the European Central Bank caused the euro to rise and the dollar to weaken, which also affected USD/RMB.

4. Understand official policy orientation: Unlike freely floating currencies, the RMB has experienced multiple exchange rate reforms. The 2017 reform introduced a new central parity setting model, which increased the guidance role of the authorities and moderated short-term volatility, though long-term trends still follow broader monetary and economic fundamentals.

How to Invest in RMB Appreciation—Diversified Channels

Investors seeking to capitalize on USD/RMB appreciation have several options:

Bank-based foreign exchange investments: Opening foreign exchange accounts with local or international banks allows direct trading and investment.

Foreign exchange brokers: These platforms offer online trading with tools for spot FX and margin trading, enabling both long and short positions. Leverage amplifies potential gains but also increases risk; prudent risk management is essential.

When choosing brokers, consider regulation, reputation, platform stability, and available features. Examples include Mitrade, XTB, Admirals, Plus500, and IG. For instance, Mitrade is regulated by CIMA, offers 24-hour trading, leverage up to 200x, low minimum trade sizes, and risk management tools. New users can receive bonuses and demo accounts.

Securities firms and futures exchanges: Some securities companies provide FX trading services, and futures exchanges offer currency futures trading, providing additional avenues for investment.

Summary and Investment Advice

The potential start of a RMB appreciation cycle makes USD/RMB forecasts highly relevant for investors. The consensus among major international banks, combined with actual appreciation in 2025, strongly suggests that RMB is entering a medium- to long-term upward trend.

This shift is driven by multiple factors: China’s resilient exports, renewed foreign investment in RMB assets, and structural weakening of the dollar index. These elements create a foundation for RMB appreciation. However, variables such as US-China relations, Fed policies, and RMB internationalization remain important to monitor.

For investors, the current period is a turning point in USD/RMB dynamics. By understanding and analyzing four key dimensions—monetary policy, economic data, USD trends, and official policy stance—individuals can assess market prospects independently. As the RMB gradually strengthens, opportunities exist across banking, FX brokers, and futures markets. Staying attentive to market changes and maintaining flexibility are essential to capturing long-term gains in this appreciation trend.