[2026 USD to RMB Exchange Rate Outlook] Interpretation of RMB Investment Opportunities and Exchange Rate Trend Analysis

Current Performance and Investment Value of the Renminbi

Entering 2025, the RMB exchange rate has shown clear two-way volatility, breaking the pattern of continuous depreciation over the past three years. The onshore USD/RMB exchange rate fluctuates between 7.1 and 7.3, appreciating approximately 2.40% year-to-date, demonstrating some resilience; the offshore market experiences larger swings, fluctuating between 7.1 and 7.4, with a cumulative appreciation of 2.80%.

Notably, on November 26, 2025, driven by improved China-U.S. trade relations and rising expectations of Fed rate cuts, the RMB against the USD appreciated rapidly, once falling below 7.08, with a low of 7.0765, marking the best performance in nearly a year. This shift indicates a significant improvement in market sentiment.

Currently, investing in RMB-related currency pairs does present profit opportunities, but timing is key. It is expected that the RMB will maintain a relatively strong stance in the short term, with overall fluctuations inversely correlated with the USD, limited in amplitude, and oscillating within a range. The probability of a rapid appreciation breaking below 7.0 before the end of 2025 is relatively low, requiring ongoing attention to the USD index trend, RMB midpoint rate signals, and the implementation pace and strength of China’s stabilizing growth policies.

The Historical Evolution of the USD/RMB Exchange Rate

Strong appreciation during the pandemic period (2020-2021)

Looking at the USD/RMB exchange rate over the past five years, the RMB experienced significant appreciation during the pandemic. In early 2020, USD/RMB fluctuated between 6.9 and 7.0, but due to China-U.S. trade frictions and pandemic shocks, the RMB depreciated to 7.18 in May. Subsequently, China quickly controlled the pandemic and led economic recovery, with the Fed sharply cutting rates to near zero, and the Chinese central bank maintaining a prudent policy stance. The interest rate differential supported the RMB’s strong rebound to around 6.50 by year-end, with an appreciation of about 6% for the year.

In 2021, this trend continued, with China’s exports growing steadily and economic performance improving. The central bank maintained a prudent monetary policy, and the USD index remained low. USD/RMB traded within a narrow range of 6.35 to 6.58, with an average around 6.45 for the year, keeping the RMB relatively strong.

The depreciation cycle starting in 2022

2022 was a pivotal year for USD/RMB. The USD rapidly appreciated from 6.35 to over 7.25, with an annual depreciation of about 8%, the largest in recent years. The main drivers were aggressive Fed rate hikes boosting the dollar index, while strict COVID-19 measures in China hampered economic growth, and a worsening real estate crisis led to a decline in market confidence.

In 2023, pressure persisted, with USD/RMB fluctuating between 6.83 and 7.35, ending the year around 7.1. Economic recovery was weaker than expected, with ongoing real estate debt issues and insufficient domestic demand, while the U.S. maintained high interest rates. The USD index ranged from 100 to 104, exerting continued pressure on the RMB.

Signs of relief appeared in 2024, with the USD weakening and easing pressure on the RMB. Coupled with China’s fiscal stimulus and real estate support measures boosting market expectations, USD/RMB rose from 7.1 to around 7.3 mid-year. Offshore RMB broke through 7.10 in August, reaching a six-month high, with volatility increasing significantly throughout the year.

Forecast of Exchange Rate Trends in 2026 and Beyond

Market Consensus and Turning Point Judgments

The mainstream view suggests that the RMB exchange rate may be at a cyclical turning point, the depreciation cycle initiated in 2022 may be nearing its end, and the RMB is expected to enter a new phase of medium- to long-term appreciation. Looking ahead to the end of 2025 and into 2026, three major factors are likely to support a strengthening trend:

First, sustained resilience of China’s exports
China’s external trade exports remain relatively stable, providing fundamental support for the RMB.

Second, the trend of reallocation of foreign capital into RMB assets
As risk appetite improves, international investors are reassessing the attractiveness of RMB assets, gradually establishing purchase intentions.

Third, structural weakening of the USD index
Changes in the global macro environment support a long-term pattern of relative USD weakness.

Predictions from international investment institutions

Several international financial institutions are optimistic about the RMB outlook:

Deutsche Bank analysis indicates that recent RMB strength against the USD may signal the start of a long-term appreciation cycle. The bank expects the USD/RMB exchange rate to rise to 7.0 by the end of 2025 and further to 6.7 by the end of 2026.

Morgan Stanley also holds a positive view on moderate RMB appreciation, expecting the USD to weaken further over the next two years. The firm predicts that by the end of 2026, the USD index could fall to 89, with the USD/RMB exchange rate possibly reaching around 7.05.

Goldman Sachs issued a major report in mid-May, raising its 12-month USD/RMB forecast from 7.35 to 7.0, suggesting the “breaking 7” point for RMB may arrive sooner than market expectations. The logic is that the real effective exchange rate of RMB is undervalued by 12% relative to the ten-year average, with a 15% undervaluation against the USD. Based on progress in China-U.S. trade negotiations and the current undervaluation, Goldman Sachs expects RMB to appreciate to 7.0 within 12 months. The report also states that strong Chinese export performance will support the RMB, and the Chinese government prefers to use other policy tools to promote economic growth rather than relying on currency depreciation. The firm sets a 3-month target of 7.2, and a 6-month target of 7.1.

Key Variables Determining the USD/RMB Exchange Rate

Future exchange rate trends are influenced by multiple medium- and long-term factors, which can be analyzed from both domestic and international perspectives:

External Drivers

USD Index Trends
In the first five months of 2025, the USD index declined by 9%, marking the worst start of the year. It is expected that the Fed’s rate cut cycle will lead to lower short-term interest rates, and the USD may depreciate further over the next 12 months, implying that Asian currencies like the RMB could continue to appreciate.

China-U.S. Trade Negotiations
Although recent talks in London showed signs of easing, the durability of a truce remains uncertain. Past agreements have often broken down quickly, so trade tensions and tariffs between China and the U.S. remain key variables affecting USD/RMB. Easing negotiations are positive for the RMB, while escalating tensions exert depreciation pressure.

Federal Reserve Monetary Policy
The Fed’s policy is crucial for USD trends. Signals of rate cuts have been released in the second half of 2024, but the magnitude and pace of rate reductions in 2025 will depend on inflation data, employment performance, and policies of the Trump administration. If inflation remains higher than expected, the Fed may slow the pace of rate cuts, supporting the USD; if the economy slows significantly, faster rate cuts could weaken the USD. The RMB and USD index generally move inversely.

Domestic Factors

Central Bank Monetary Policy Orientation
The People’s Bank of China tends to maintain an accommodative stance to support economic recovery, especially amid weak real estate and insufficient domestic demand. Rate cuts or reserve requirement ratio reductions that increase liquidity typically exert short-term depreciation pressure on the RMB, but if such easing is coupled with strong fiscal stimulus to stabilize the economy, the RMB could be supported in the long term.

RMB Internationalization Process
The increasing use of RMB in global trade settlements and currency swap agreements with other countries will support RMB stability over the long term. However, in the short term, the USD’s status as the primary reserve currency remains difficult to challenge.

Investment Strategies for RMB Exchange Rate Trends

Step 1: Track the People’s Bank of China’s monetary policy

The central bank’s policy stance directly impacts money supply and thus influences the exchange rate. Easing policies like rate cuts or reserve requirement reductions increase RMB supply expectations, leading to depreciation; tightening policies like rate hikes or reserve ratio increases tighten liquidity and support the RMB.

For example, in November 2014, the PBOC initiated an easing cycle, lowering loan rates six times and continuously reducing reserve requirements, bringing reserve ratios for small and medium-sized banks from 18% down to below 8%. During this period, USD/RMB rose from 6.0 to nearly 7.4, illustrating the profound impact of monetary policy on the exchange rate.

Step 2: Monitor China’s economic fundamentals

Stable economic growth attracts continuous foreign investment, increasing RMB demand and pushing up the exchange rate; conversely, slowing growth weakens foreign inflows and the RMB.

Key indicators include:

GDP Data: Released quarterly, reflecting macroeconomic conditions, and a key reference for investors.

Purchasing Managers’ Index (PMI): Published monthly by official and Caixin sources. Official PMI mainly covers large and medium enterprises, while Caixin includes small and medium enterprises, with separate indices for manufacturing and services.

Consumer Price Index (CPI): Released monthly, measuring inflation and indirectly reflecting economic heat. High inflation may trigger policy tightening.

Urban Fixed Asset Investment: Published monthly by the National Bureau of Statistics, indicating investment trends in economic activity.

Step 3: Monitor USD index performance

The USD’s movement directly affects USD/RMB fluctuations, with Fed and ECB policies often being key drivers. In early 2017, the Eurozone experienced its strongest recovery since the debt crisis, with GDP growth surpassing the U.S., and the ECB signaling tightening, boosting the euro. The USD index fell 15% throughout the year, and USD/RMB also declined similarly, reflecting a high correlation.

Step 4: Understand official policy orientation on the exchange rate

Unlike freely floating market-based currencies, the RMB has undergone multiple exchange rate management reforms since China’s reform and opening-up in 1978. The last major adjustment on May 26, 2017, changed the RMB central parity rate model from “closing price + a basket of currencies exchange rate change” to “closing price + a basket of currencies exchange rate change + countercyclical factor,” easing market procyclical behavior and strengthening official guidance. Recent observations show this approach significantly influences short-term exchange rates, but the medium- to long-term trend remains driven by the overall direction of the currency market.

Main Channels for Investing in RMB

Investors across regions can participate in RMB investment through various channels:

Bank Foreign Exchange Accounts: Open foreign exchange accounts with local commercial banks or international banks for forex trading and investment.

Forex Trading Platforms: Partner with forex brokers to trade on their platforms, utilizing online tools for convenience. Many platforms allow holding long and short positions; as long as the price trend aligns with expectations, profits can be made from falling prices. Most platforms support leverage trading, providing larger market exposure than the principal, but investors should set leverage ratios reasonably to control risks.

Securities Firms: Some securities companies offer forex trading services, allowing investors to buy and sell foreign exchange on designated platforms.

Futures Exchanges: Engage in forex investment through futures markets by opening accounts for forex futures trading.

Summary and Investment Advice

As China enters a period of sustained easing in monetary policy, the USD/RMB exchange rate exhibits a clear trending pattern. Based on historical experience, such policy-driven cycles can last for a decade, with short- and medium-term performance influenced by USD trends and other events.

By focusing on the key factors affecting RMB movement—central bank policies, domestic economic data, USD performance, and official policy orientation—investors can significantly improve their chances of profit. The forex market is driven mainly by macro factors, with transparent and publicly available economic data from various countries, and the large trading volume with two-way trading features, making it relatively fair and advantageous for individual investors. It is an important tool for diversifying asset allocation.