RMB Exchange Rate Outlook for 2026 | Will the USD to RMB exchange rate continue to rise? The latest trend analysis is here

Renminbi Rebounds from Decline, Hits 14-Month High

As 2025 comes to an end, the Renminbi (RMB) exchange market shows signs of a reversal. The USD to RMB exchange rate surged past the 7.05 level in mid-December, then continued to rise to 7.0404, reaching a nearly 14-month high. What does this reflect?

Looking back at 2025, the RMB experienced a “first decline, then rise” rollercoaster. In the first half of the year, global tariff uncertainties and a strengthening US dollar index caused the USD to RMB rate to dip to 7.40, the lowest since the 2015 currency reform. But in the second half, with China-US negotiations showing goodwill and the dollar index turning downward, the RMB finally turned around, climbing from around 7.30 to 7.04.

Overall in 2025, the RMB appreciated approximately 3%, ending a three-year streak of depreciation against the US dollar from 2022 to 2024. How significant is this reversal? To some extent, it marks a potential end to the RMB’s depreciation cycle.

Short-term Outlook: RMB May Stay Relatively Strong, Rapid Break Below 7 Unlikely

For investors looking to enter the market, a key question is: Can I buy RMB now?

Simply put, yes, there is opportunity, but no need to rush. The USD to RMB exchange rate is expected to remain relatively strong in the short term (by the end of 2025), but a quick drop below 7.0 is less likely. The expected trend is more of a two-way fluctuation within the current range rather than a straight surge.

Three key variables to watch:

• US Dollar Index Trend — Continued weakness favors RMB
• Central Bank’s Mid-Rate Adjustment Signals — Critical to monitor
• China’s Stabilization and Growth Policies — Improving economic data will attract foreign investment

Long-term Outlook: International Banks Turn Bullish on RMB

Looking ahead to 2026, the environment for the RMB is expected to improve significantly. Major international banks have started to revise their outlook positively:

Deutsche Bank forecasts the USD to RMB exchange rate will rise to 7.0 by the end of 2025 and further to 6.7 by the end of 2026, implying a continued decline of the US dollar against the RMB.

Goldman Sachs has a more aggressive view. The bank’s analysis indicates that the current real effective exchange rate of the RMB is undervalued by 12% compared to its ten-year average, with an even 15% undervaluation against the dollar. Based on this valuation gap, Goldman Sachs expects the RMB to appreciate to 7.0 against the USD within the next 12 months. Additionally, Goldman emphasizes China’s strong export resilience and the government’s preference for fiscal rather than currency depreciation to stimulate growth, providing long-term support for the RMB.

Three core reasons support RMB appreciation:

1. Continued resilience in China’s export growth
2. Re-emerging trend of foreign capital reallocating into RMB assets
3. Structural weakness in the US dollar index

Four Major Factors Influencing the RMB You Need to Know

Central Bank’s Monetary Policy Is the Most Direct

The People’s Bank of China’s (PBOC) interest rate adjustments and reserve requirement ratio changes directly impact RMB supply and price. Easing policies (rate cuts/ RRR reductions) typically weaken the RMB, while tightening has the opposite effect. During six rate-cut cycles in the past, the USD to RMB exchange rate rose from 6 to 7.4, demonstrating significant influence.

Economic Data Shapes Foreign Investment Sentiment

When China’s economic indicators like GDP and PMI are strong, foreign investment continues to flow in, boosting demand for RMB. Conversely, weaker data reduces attractiveness. This explains why, after recent stabilization policies, the RMB exchange rate has started to rebound.

US Dollar Index Is a Decisive Variable

The USD trend directly affects the USD to RMB rate. Federal Reserve rate hikes/lowerings and US economic data are key indicators. In the first half of 2025, the dollar index fell from 109 to 98, a nearly 10% decline, providing a favorable backdrop for RMB strength.

Official Exchange Rate Controls Cannot Be Ignored

Unlike freely convertible currencies, the RMB’s mid-rate quotation model includes an “inverse cycle factor,” giving the PBOC some guidance over the exchange rate. In the short term, this influence is evident, but the medium- and long-term trend is primarily driven by market forces.

RMB Performance in the Past Five Years

2020: During the initial outbreak of the pandemic, RMB briefly depreciated to 7.18, but as China led the pandemic control and economic recovery, coupled with the Fed’s near-zero interest rates, the RMB rebounded strongly to 6.50 by year-end, appreciating about 6%.

2021: With robust exports and economic growth, the RMB remained relatively strong, fluctuating narrowly between 6.35 and 6.58.

2022: The Fed’s aggressive rate hikes pushed the dollar index higher, while China’s pandemic policies and real estate crisis dragged on the economy. The USD to RMB rate rose above 7.25 from 6.35, depreciating about 8%, the largest decline in recent years.

2023: Slower economic recovery and ongoing real estate debt issues kept the RMB under pressure, fluctuating between 6.83 and 7.35.

2024: The dollar weakened, and China’s fiscal stimulus boosted confidence, increasing RMB volatility, with a brief surge below 7.10 mid-year.

Offshore RMB (CNH) Is More Sensitive and Volatile

Another detail in the trading market: offshore RMB (CNH), traded in Hong Kong, Singapore, and other free markets, is not subject to capital controls, making it more sensitive to global market sentiment and more volatile.

In 2025, CNH briefly broke below 7.36, then rebounded over 4% to below 7.05. Its fluctuations are significantly larger than onshore RMB (CNY), indicating growing international confidence in the RMB.

How Should Investors View It?

By mastering these four judgment dimensions—monitoring PBOC policy signals, tracking Chinese economic data releases, following USD index trends, and observing official exchange rate adjustments—you can respond effectively regardless of market fluctuations.

In short, the environment for the RMB is improving, with a gradually established long-term appreciation expectation. However, in the short term, patience is needed for the USD to RMB rate to stabilize around 7.0–7.05. For traders wanting to participate, watch the 7.0–7.05 range as a key observation point, and pay close attention to the December Fed decision and Chinese economic data, which are critical triggers for short-term movements.

The forex market is primarily driven by macro factors. Countries with transparent data, large trading volumes, and two-way trading mechanisms offer relatively fair opportunities for investors. Want to start forex trading? Focus on fundamentals and technicals, manage risks well, and profit opportunities will follow.