New momentum for RMB internationalization: Central bank's prudent policies support it, Goldman Sachs forecasts rise to 6.85 by 2026

In recent months, the Chinese Renminbi has shown an unexpectedly strong appreciation trend. The market generally believes that this is not simply a technical breakthrough but a strategic adjustment at the policy level. As of November 26, the onshore USD/CNY exchange rate fell to 7.0824, and the offshore USD/CNY even dropped to 7.0779, hitting a new low in over a year. During the same period, the CFETS Renminbi Exchange Rate Index reached 98.22, touching a high for the year.

Central Bank Precise Guidance, the Policy Logic Behind the Steady Appreciation of the Renminbi

The driving forces behind the Renminbi’s appreciation stem from two aspects: the Federal Reserve’s interest rate cut cycle releasing liquidity, and the People’s Bank of China (PBOC) continuously guiding market expectations through daily midpoint setting (allowing the spot exchange rate to fluctuate within 2% around the midpoint). More notably, state-owned banks frequently intervene in the foreign exchange market by buying US dollars to stabilize exchange rate fluctuations, ensuring a smooth and orderly appreciation process.

This approach is reminiscent of the strategy during the 1998 Asian financial crisis, where the Renminbi refused to engage in competitive devaluation. Kelvin Lam, Senior Economist at Pantheon Macroeconomics, pointed out that from a strategic perspective, China is clearly demonstrating a stable Renminbi image to strengthen international credibility and lay a foundation for its long-term international monetary status.

Comparing with History: 2025 Appreciation Outperforming Expectations

By comparison, during the US-China trade friction in 2018, the Renminbi faced depreciation pressure, with a nearly 5% decline over the year. In contrast, by 2025, the Renminbi has already appreciated by nearly 3%, showing a completely opposite trend. Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that in the context of global market volatility, the Renminbi’s resilience and stability demonstrate the strongest market evidence for advancing its internationalization.

International Status Rising, Foreign Exchange Trading Volume Reaching New Highs

The latest data from the Bank for International Settlements (BIS) provides strong support. Since the last survey in 2022, the daily trading volume of USD/CNY has increased by nearly 60%, reaching $781 billion, accounting for over 8% of the total global foreign exchange daily trading volume. This indicates that more and more international market participants are seeking opportunities in Renminbi trading. In comparison, other non-dollar currencies like the Australian dollar also participate, but the trading activity of the Renminbi is significantly ahead.

Goldman Sachs Forecast: Renminbi Appreciation Potential Continues to Unfold

Goldman Sachs’ analysis team, based on their assessment of the central bank’s policy stance, expects the exchange rate to reach 1 USD to 7 RMB by the end of the year, and then continue to appreciate to 6.85 in 2026. The logic behind this forecast is clear: the central bank’s recognition of the Renminbi’s appreciation indicates that monetary policy is generally inclined to support the appreciation trend.

More importantly, Goldman Sachs believes that Renminbi internationalization has become a clear policy priority for the Chinese government and is expected to accelerate significantly in the coming years. This involves not only the exchange rate but also a fundamental shift in the Renminbi’s status within the global reserve currency system. The combined influence of economic and non-economic factors is driving this transformation.