USD to RMB Exchange Rate Outlook 2026: Institutions unanimously optimistic about RMB appreciation, how should you position yourself?

Renminbi Reversal Is Imminent, a New Exchange Rate Cycle Quietly Begins

If you’re still debating whether to enter the USD/RMB trading at this moment, first check the latest data. The RMB exchange rate trend in 2025 has been full of twists and turns, finally breaking the three-year consecutive depreciation against the US dollar from 2022 to 2024.

The USD/RMB exchange rate fluctuated within 7.04 to 7.3 throughout the year, appreciating by about 3% in total; meanwhile, the offshore USD/CNH traded between 7.02 and 7.4, showing greater sensitivity to international factors. The latest critical moment was December 15, when, driven by Federal Reserve rate cuts and market sentiment, the RMB against the dollar surged past the 7.05 threshold, with the rally continuing to 7.0404, marking a new high in nearly 14 months.

What does this turning point mean? The market generally believes that the RMB depreciation cycle that began in 2022 may have ended, and a new medium- to long-term appreciation trajectory is taking shape.

What Do Institutions Say? Deutsche Bank and Goldman Sachs Are Optimistic About RMB Appreciation

Don’t just look at market volatility; institutional forecasts are more valuable references.

Deutsche Bank’s analysis indicates that the recent strength of the RMB against the dollar signals the start of a long-term appreciation cycle. The bank forecasts that the USD/RMB exchange rate will rise to 7.0 by the end of 2025 and further to 6.7 by the end of 2026. In other words, if these predictions materialize, there is room for RMB appreciation.

Goldman Sachs’s perspective is even more eye-catching. Global FX strategist Kamakshya Trivedi significantly revised the USD/RMB forecast for the next 12 months from 7.35 down to 7.0 in a report, implying that the “breaking 7” point for RMB may arrive sooner than the market expects. Goldman’s logic is based on the fact that the current real effective exchange rate of RMB is undervalued by 12% relative to the ten-year average, and by 15% against the dollar. With progress in US-China trade negotiations, RMB has huge appreciation potential. Additionally, China’s strong export performance will support the RMB, and the government prefers to use other policy tools to boost the economy rather than pursue currency depreciation strategies.

Four Major Factors Truly Influencing USD/RMB Trends

To judge the future direction of USD/RMB, you must keep an eye on these four variables:

USD Index Trend: In the first half of 2025, the USD index fell from 109 at the start of the year to about 98, a decline of nearly 10%, marking the weakest first half since the 1970s. But after November, influenced by expectations of Fed rate cuts easing and US economic data exceeding expectations, the USD index rebounded. Post-December, with the Fed’s rate cuts implemented and possibly leaning dovish, the USD index weakened again, touching a low of 97.869, then settling in the 97.8-98.5 range. Simply put, a moderate strengthening of the dollar usually puts pressure on the RMB, but positive short-term US-China relations can offset this.

US-China Negotiation Progress: In the latest round of US-China economic and trade talks in Kuala Lumpur, both sides reached a trade truce. The US agreed to reduce tariffs on Chinese goods related to fentanyl from 20% to 10%, and to suspend the 24% additional tariffs on reciprocal tariffs until November 2026. Both countries also agreed to delay export controls on rare earths and port fee measures, and to expand purchases of US soybeans and other agricultural products. However, whether this truce can be maintained long-term remains uncertain, as a similar agreement reached in Geneva in May this year quickly fell apart. Therefore, US-China trade relations are the most critical external factor in determining USD/RMB exchange rate trends. If the current situation persists, the RMB environment will remain stable; if friction intensifies, the RMB will face new pressures.

Federal Reserve and Central Bank Policies: The US Federal Reserve’s monetary policy is crucial for the dollar’s trend. If inflation remains above target, the Fed may slow down rate cuts, supporting the dollar; if the economy slows, accelerated rate cuts will weaken the dollar. Conversely, China’s People’s Bank tends to maintain an accommodative monetary policy to support economic recovery. Rate cuts or reserve requirement ratio reductions, while exerting downward pressure on the RMB, can, if combined with stronger fiscal stimulus and economic stabilization, lead to RMB appreciation in the long run. The RMB and USD index usually move inversely.

RMB Internationalization Process: Increasing use of RMB in global trade settlements and currency swap agreements between China and other countries may support RMB stability over the long term. But in the short term, the dollar’s status as the primary reserve currency remains hard to challenge.

From End of 2025 to 2026, Three Major Supports Drive Exchange Rate Strengthening

Looking ahead, the market generally sees three main supporting factors:

1. Resilient Chinese export growth—even amid external challenges, export data remains robust
2. Gradual reallocation of foreign capital into RMB assets—institutions and investors reassess RMB asset value
3. Structural weakness of the USD index—Fed policy shifts and global economic dynamics support this view

Investor Must-Read: How to Judge RMB Exchange Rate Trends?

Instead of blindly following the trend, it’s better to understand the key judgment methods. The following four dimensions can help you grasp the future of USD/RMB:

First, watch the central bank’s monetary policy: The People’s Bank of China’s policy stance directly impacts money supply. When policies are loose (rate cuts, reserve requirement ratio reductions), expectations of increased supply tend to weaken the RMB; when policies tighten (rate hikes, reserve ratio hikes), liquidity tightens, and the RMB tends to strengthen. For example, in 2014, the PBOC initiated a loosening cycle, cutting rates six times and significantly lowering reserve requirements, causing USD/RMB to rise from 6 to nearly 7.4, demonstrating its profound influence.

Second, monitor economic data: Stable economic growth in China attracts sustained foreign capital inflows, increasing demand for RMB and strengthening it; conversely, economic slowdown or reduced attractiveness puts pressure on the RMB. Key data include: GDP (quarterly release, macroeconomic indicator), PMI (monthly, manufacturing and services activity), CPI (monthly, price changes), and urban fixed asset investment (monthly, fixed asset activity).

Third, observe the dollar’s trend: The USD’s movement directly impacts USD/RMB. The policies of the Fed and the European Central Bank are critical. For example, in 2017, the Eurozone’s strong economic recovery, with GDP growth surpassing the US, and the ECB signaling tightening, pushed up the euro. Meanwhile, after the USD index broke above 100, it showed signs of fatigue, falling 15% over the year, and USD/RMB also declined, illustrating their high correlation.

Fourth, consider official exchange rate orientation: The RMB is not fully freely convertible; market pricing is guided by the People’s Bank. After the last exchange rate reform in 2017, the RMB’s central parity was adjusted to a “closing price + a basket of currencies + counter-cyclical factor,” strengthening official guidance. However, recent observations suggest that the official orientation has a significant short-term influence on the exchange rate, while the medium- to long-term trend depends on the overall currency market direction.

Historical Review: RMB Exchange Rate Cycles in the Past Five Years

2020: At the start of the year, USD/RMB was between 6.9-7.0. Due to US-China trade tensions and the pandemic, it depreciated to 7.18 in May. China quickly controlled the pandemic, leading the economic recovery, while the Fed cut rates to near zero, expanding interest rate differentials and supporting the RMB. By year-end, it rebounded strongly to around 6.50, appreciating about 6% for the year.

2021: China’s exports remained strong, and the PBOC maintained prudent policies. The USD index stayed low, and USD/RMB fluctuated narrowly between 6.35 and 6.58, with an average around 6.45, maintaining relative strength.

2022: The Fed aggressively raised interest rates, and the USD index soared, pushing USD/RMB from 6.35 above 7.25, depreciating about 8%, the largest decline in recent years. Meanwhile, China’s pandemic policies hampered the economy, and a real estate crisis worsened market confidence.

2023: The exchange rate fluctuated between 6.83 and 7.35, averaging about 7.0, ending slightly higher at 7.1. Post-pandemic economic recovery was weaker than expected, and ongoing real estate debt issues, combined with high US interest rates, kept the RMB under pressure.

2024: The weakening dollar eased pressure, and China’s fiscal stimulus and real estate support measures boosted confidence. USD/RMB volatility increased throughout the year, with offshore RMB breaking 7.10 in August to reach a six-month high.

Offshore RMB (CNH) Performs More Sensitively

Unlike onshore RMB (CNY), which is subject to capital controls and guided by the People’s Bank through the midpoint rate and forex interventions, offshore RMB (CNH) trades in international markets like Hong Kong and Singapore, with capital flows less restricted, reflecting global market sentiment. Therefore, its volatility tends to be greater.

In 2025, despite multiple fluctuations, offshore RMB generally trended upward. Early in the year, US tariffs and the USD index soaring to 109.85 caused CNH to depreciate past 7.36, prompting the PBOC to take stabilization measures, including issuing 60 billion yuan of offshore bonds to recover liquidity and controlling the midpoint rate.

Recently, as US-China dialogue eased, China’s steady growth policies took effect, and Fed rate cut expectations increased, CNH appreciated significantly. On December 15, CNH against the dollar broke 7.05, rebounding over 4% from the early-year high, reaching a 13-month high.

Is It Suitable to Buy RMB-Related Currency Pairs Now?

The answer is: Yes, but with rhythm.

In the short term, RMB is expected to remain relatively strong, generally moving inversely to the dollar within a limited range. The possibility of rapid appreciation into the 7.0 range before the end of 2025 is low.

The three key variables to watch are: USD index trend, RMB midpoint rate signals, and China’s steady growth policies and their pace. These are critical for short-term USD/RMB fluctuations and direction.

Overall, as China enters a sustained easing cycle in monetary policy, USD/RMB will likely develop a clear trend. Based on similar historical cycles, this trend could last for a decade, with short- to medium-term performance influenced by dollar movements and major events. By understanding these factors, investors can significantly improve profit chances. The forex market is primarily macro-driven, with transparent data releases worldwide, large trading volumes, and two-way trading, making it a relatively fair and advantageous investment for individual investors.