How will the RMB perform in 2026? Multiple investment banks collectively expect appreciation

The performance of the RMB this year can be described as a “comeback.” After three consecutive years of depreciation from 2022 to 2024, the RMB against the US dollar reversed its downward trend in 2025, showing a moderate appreciation trend. The latest data indicates that the USD to RMB exchange rate has fallen from around 7.3 at the beginning of the year to below 7.08, even touching 7.0765 at one point, hitting a nearly one-year high.

What does this reflect? Market sentiment is shifting. From the pessimism in the first half of the year (breaking below 7.40) to optimism in the second half (rising above 7.08), the RMB has charted a beautiful reversal curve. Even more exciting is that multiple international investment banks have issued a consensus outlook on the future RMB trend.

Investment Banks Are Turning Bullish on the RMB, Where Are Their Target Prices?

Deutsche Bank’s forecast is the most aggressive. The bank believes that the RMB is entering a long-term appreciation cycle. Specifically, Deutsche expects the USD to RMB exchange rate to reach 7.0 by the end of 2025 and further drop to 6.7 by the end of 2026. This implies that from now until the end of next year, the RMB has an appreciation potential of about 3-4%.

Morgan Stanley adopts a more moderate stance. The firm predicts that by 2026, the US dollar index may fall back to around 89, corresponding to an RMB/USD exchange rate of approximately 7.05. In other words, Morgan Stanley believes the downward adjustment of the USD against the RMB will be less pronounced.

The most interesting view comes from Goldman Sachs. In a mid-year report, this top global investment bank raised its 12-month USD to RMB exchange rate forecast from 7.35 directly to 7.0, providing a more specific timeline: a target of 7.2 in 3 months, and 7.1 in 6 months. Goldman’s logic is clear— the RMB is currently undervalued by about 15%, and this undervaluation will eventually be corrected.

What do these three major investment banks have in common? They are all optimistic about RMB appreciation, expecting the USD to weaken further against the RMB by 2026.

Why Is Investing in RMB Now Profitable? Three Key Supporting Factors Cannot Be Ignored

If investment banks are optimistic, what is the logic supporting RMB appreciation?

First, China’s export resilience is strong. Despite global trade uncertainties, China’s exports continue to show robust resistance. Strong exports mean continuous demand for RMB, naturally pushing up its value.

Second, foreign capital is re-evaluating RMB assets. After several years of depreciation, RMB assets are regaining attractiveness. The trend of foreign investment allocating into RMB assets is gradually establishing, providing medium- to long-term purchasing power support for the RMB.

Third, the US dollar index is in a structural weakness phase. In the first five months of 2025, the dollar index fell by 9%, marking the worst start to a year on record. As the Federal Reserve begins a rate-cutting cycle, the dollar may continue to weaken, which is positive for all non-US currencies, including the RMB.

The combination of these three factors has laid a solid foundation for RMB appreciation.

Looking Back: How Has the RMB Moved Over the Past 5 Years?

To understand the future, it’s helpful to review the past.

The RMB experienced a “V-shaped reversal” in 2020. At the start of the year, USD to RMB fluctuated between 6.9 and 7.0, but due to US-China trade tensions and the pandemic, the RMB depreciated to around 7.18. Subsequently, China’s effective pandemic control and economic recovery, coupled with the Fed’s near-zero interest rates, widened the interest rate differential, boosting RMB attractiveness. By the end of the year, the RMB rebounded strongly to 6.50, appreciating about 6% for the year.

2021 was a “comfortable year” for the RMB. China’s exports remained strong, the central bank maintained a prudent policy, and the USD index stayed low. The USD to RMB exchange rate fluctuated narrowly between 6.35 and 6.58, with an average around 6.45, keeping the RMB relatively strong.

2022 saw a dramatic shift. The Fed’s aggressive rate hikes caused the USD index to surge, pushing USD to RMB from around 6.35 to over 7.25, with a depreciation of about 8% for the year—the largest decline in recent years. Meanwhile, China’s real estate crisis erupted, severely damaging market confidence, and the RMB came under significant pressure.

2023 was a “low period” for the RMB. USD to RMB fluctuated between 6.83 and 7.35, ending the year around 7.1. Economic recovery was weaker than expected, the real estate sector continued to decline, and consumption remained soft. The US maintained high interest rates, leaving little room for a strong rebound in the RMB.

2024 saw a “dawn.” The USD weakened, China launched fiscal stimulus measures, and supportive policies for real estate were introduced gradually, restoring market confidence. The USD to RMB rose from 7.1 at the start of the year to 7.3 mid-year, and briefly broke below 7.10 in August. Volatility increased significantly, and the RMB began to stir from its bottom.

Looking Ahead to 2026: Where Are the Key Uncertainties?

The future RMB trend is not fixed and depends on several key variables.

The USD index trend is the primary variable. If the Fed’s rate cuts exceed expectations, the dollar may continue to weaken; if inflation remains high, rate hikes may pause, allowing the dollar to stay strong. The RMB and USD index usually move inversely, so a weaker dollar generally means a stronger RMB.

Progress in US-China negotiations is equally critical. Improved trade relations favor RMB appreciation, while setbacks will put pressure on it. Currently, signs of easing US-China tensions are positive for the RMB, but whether this détente can last remains uncertain.

The People’s Bank of China’s policy stance also warrants attention. The central bank currently favors easing to support economic recovery, which can exert downward pressure on the RMB. However, if easing is combined with strong fiscal stimulus to stabilize growth, it could ultimately support the RMB in the long run.

Adjustments to the RMB’s central parity quotation mechanism are also important. Since the introduction of the “countercyclical factor” in 2017, the PBOC’s guidance on the exchange rate has strengthened. While short-term impacts are significant, the medium- to long-term trend still depends on the overall market direction.

How to Judge RMB Trends? Investors Should Focus on These 4 Points

Rather than passively waiting, it’s better to actively learn how to read the market. To forecast RMB future movements, several key indicators should be monitored.

First, keep an eye on monetary policy directions. Central bank rate cuts and reserve requirement ratio reductions directly influence money supply and demand, affecting the exchange rate. For example, in 2014, the PBOC launched a loosening cycle, cutting RRR and interest rates consecutively, which caused USD to RMB to rise from 6 to nearly 7.4, demonstrating the power of monetary policy.

Second, watch economic data performance. Indicators like GDP, PMI, CPI, and urban fixed asset investment reflect economic health. Improving economic fundamentals attract foreign investment, increasing RMB demand, and vice versa.

Third, track the USD trend. Federal Reserve policies, US economic data, and the USD index directly impact the dollar’s strength, which in turn influences USD to RMB exchange rates. For instance, in 2017, the Eurozone’s economic recovery outperformed the US, leading to a 15% decline in the USD index and a corresponding drop in USD to RMB.

Fourth, understand official attitudes. Although RMB is gradually marketized, the PBOC still guides the exchange rate through the central parity and countercyclical adjustments. Observing these subtle signals can often reveal market turning points in advance.

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

Simply put: yes, but timing is crucial.

Based on current conditions, the RMB is expected to remain relatively strong in the short term, with limited fluctuations inversely correlated with the USD. It’s unlikely to quickly fall below 7.0 before the end of 2025, but the RMB is expected to further strengthen throughout 2026.

What does this mean? If you are optimistic about RMB appreciation, entering now offers good value. As long as you can accurately judge the changes in the four key indicators mentioned above, you can potentially profit from the RMB appreciation cycle.

Especially for investors who are bearish on the USD and bullish on emerging market currencies, the RMB’s appreciation potential from its current level is quite evident. According to forecasts from multiple investment banks, by the end of 2026, the USD to RMB exchange rate could decline from the current 7.08 to a range of 6.7-7.05, presenting a clear profit opportunity.

In summary: by focusing on macro policies, economic data, the USD index, and official signals—plus positive factors like international investment banks’ optimism, resilient exports, and reallocation of foreign capital—investing in RMB-related currency pairs now is supported by solid logic.