After the RMB breaks above 7, how much more will it rise by 2026?

Despite the RMB to USD exchange rate hitting a new high in 2023 recently, several international investment banks believe that the upward trend has only just begun. According to market forecasts, the RMB still has room to rise further next year. What signals are reflected behind this?

The Three Main Drivers Behind the Year-End Exchange Rate Breakthrough

On December 25, the USD to offshore RMB (USD/CNH) fell to 6.9965, and USD to onshore RMB (USD/CNY) dropped even further to 7.0051, both hitting new lows for the year. The factors driving this round of RMB appreciation are not singular but the result of multiple forces acting together.

First is the overall weakening of the US dollar. Against the backdrop of the Federal Reserve’s rate cut cycle and global de-dollarization, the US dollar index has declined by over 10% this year, with a further drop of more than 2% in the past month. When the dollar lacks attractiveness, the RMB naturally becomes a relatively strong currency.

Second is the policy stance of the People’s Bank of China (PBOC), which is also crucial. Throughout the year, the central bank continuously raised the midpoint of USD to RMB exchange rate, clearly signaling guidance for RMB appreciation.

Third is the year-end foreign exchange settlement effect that cannot be ignored. The massive trade surplus accumulated by China in 2025 was concentrated for settlement at year-end, boosting demand for RMB through seasonal foreign exchange conversions by enterprises. Additionally, the PBOC did not take further rate cuts, and the tight offshore liquidity at year-end also contributed to the trend.

Wang Qing, Chief Macro Analyst at Orient Securities, pointed out: “The weakness of the US dollar and the seasonal foreign exchange conversions by exporters jointly pushed the RMB stronger, and the continued appreciation of the RMB helps enhance China’s capital market attractiveness to foreign investors.”

Will the RMB have room to rise in 2026?

Although the RMB has already reached a new high, from a fundamental perspective, the upward momentum may not be fully exhausted.

Goldman Sachs’s research team believes that relative to China’s economic fundamentals, the RMB is still undervalued by about 25%. The bank forecasts that the USD to RMB will fall to 6.90 by mid-2026 and further decline to 6.85 by the end of the year.

ANZ Bank’s senior strategist Xing Zhaopeng holds a more moderate view, expecting USD to RMB to fluctuate within the range of 6.95-7.00 in the first half of 2026.

A more optimistic view comes from Bank of America. The bank believes that with the easing of US-China relations, the outlook for Chinese exporters will improve. The scale of exporters selling USD to exchange for RMB is expected to further expand next year, so Bank of America forecasts USD to RMB will fall to 6.80 by the end of 2026.

Although these forecasts differ, they all point in the same direction: the RMB’s appreciation trend is expected to continue into 2026. For investors, this means closely monitoring investment opportunities in RMB assets while also guarding against exchange rate volatility risks.