## RMB Exchange Rate Forecast for 2026｜Is This Appreciation Cycle Really Coming?

The RMB has recently gained popularity. From an early-year rebound from 7.3 to 7.04, hitting a 14-month high. Many investors are starting to ask: Is now the bottoming opportunity to buy RMB? To answer this, we need to first understand the logic behind the **USD to RMB exchange rate**.

## RMB Has Completed Its Turn in 2025

Interestingly, the performance of the RMB in 2025 can be described as a comeback from the dead. Over the past three years (2022-2024), the RMB against the USD depreciated consecutively, and the market once thought this was a long-term trend. But this year, the situation reversed.

USD to RMB fluctuated between 7.04 and 7.3, appreciating about 3% for the year. The offshore market was even more volatile, swinging between 7.02 and 7.4. Most importantly, **the RMB finally climbed out of the depreciation quagmire**.

Why is this happening? The answer is simple—the macro environment has changed. In the first half of the year, the USD was dominant, with the dollar index falling from 109 to 98, a nearly 10% decline. In the second half, US-China negotiations gradually reached consensus, and market sentiment improved significantly. After the Fed cut interest rates in December, the dollar index weakened again, hitting a low of 97.869. Against this backdrop, the RMB naturally rose with the tide.

## Four Major Factors Determining the **USD to RMB Exchange Rate** Trend

### Where Will the Dollar Index Go

The strength or weakness of the USD directly determines the ceiling of the **USD to RMB exchange rate**. In the first half of 2025, the dollar performed the worst since the 1970s, but rebounded in November. The question is, how long can this dollar rally last?

Market observations show that the dollar index has recently tested between 97.8 and 98.5. If the Fed truly enters a rate-cutting cycle, it will be difficult for the dollar to surge again. But if US inflation remains sticky and the Fed is forced to hold steady, the dollar could turn around. That’s why **the dollar trend is the most direct variable in judging RMB direction**.

### Hope from US-China Trade Relaxation

The latest round of US-China economic and trade talks just concluded. The US lowered tariffs related to fentanyl from 20% to 10%, and the reciprocal tariff increase was suspended until November 2026. The two countries also agreed to expand US agricultural product purchases.

Sounds good, right? But there’s a problem—similar agreements were reached during the Geneva negotiations in May, only to break down quickly. So, **uncertainty in US-China trade relations still exists**.

If friction reignites, the RMB will come under immediate pressure. That’s why, in the short term, **the USD to RMB exchange rate** is prone to fluctuations.

### The Invisible Battle of Central Bank Policies

The People’s Bank of China tends to adopt an easing policy to stimulate the economy, which usually puts downward pressure on the RMB. But if easing policies indeed stabilize the economy, they can support the RMB in the long run.

The Fed’s policy stance is equally important. Rate cuts began in the second half of 2024, but the pace depends on US inflation and employment data. High inflation delays rate cuts, supporting the dollar; economic slowdown accelerates rate cuts, weakening the dollar.

In simple terms: **The RMB and the dollar index usually move inversely**. Grasping this is half the secret to forex trading.

### Long-term Support for RMB Internationalization

The use of RMB in global trade settlement is increasing, and more currency swap agreements with other countries are being signed. These are structural supports for long-term RMB appreciation. But in the short term, the dollar’s status as the world’s primary reserve currency remains hard to challenge.

## What Do International Investment Banks Say?

Deutsche Bank is optimistic about RMB appreciation. They believe RMB is entering a long-term appreciation cycle, expecting it to reach 7.0 by the end of the year and further appreciate to 6.7 by the end of 2026.

Goldman Sachs is even more aggressive. The global FX strategy head stated in May that the RMB is currently undervalued by 15% against the dollar, and could rise to 7.0 within 12 months. Goldman’s logic: China’s exports are strong, and the government prefers to stimulate the economy through other policies rather than currency depreciation.

**A common point in these forecasts: RMB is at a cycle turning point, with a high likelihood of shifting from depreciation to appreciation.**

## Can You Buy RMB Now?

Simple answer: Yes, but don’t expect quick huge profits.

**Short-term expectation:** The probability of RMB rapidly appreciating into below 7.0 before year-end is low. It’s expected to stay in the 7.0-7.3 range, moving inversely to the dollar.

**Key variables:** Keep an eye on three things—USD index trend, RMB midpoint rate signals, and China’s actual efforts to stabilize growth.

**Investment logic:** If you are bullish on long-term RMB appreciation, consider phased positioning. But avoid going all-in at the top. If the USD index rebounds again, **the USD to RMB exchange rate** may test 7.3 again.

## How to Judge the Next Direction of RMB?

Here are some practical ideas:

### 1. Watch Central Bank Monetary Policy Signals

Rate cuts and reserve requirement ratio reductions usually mean RMB downside pressure; rate hikes and reserve ratio increases suggest RMB strength. In 2014, the PBOC cut rates six times in a row, pushing USD to RMB from 6 to 7.4. **Policy shifts often predict future trends better than price movements alone**.

### 2. Look at Economic Data for Support

GDP, PMI, CPI—these three indicators are most important. Improving economy and increased foreign capital inflows boost RMB demand, supporting its appreciation. Conversely, the opposite. Currently, China’s stabilization policies are still in the fermentation stage, which is positive for RMB.

### 3. USD Index as a Direct Influencer

A weakening dollar is basically the prelude to RMB appreciation. Once the dollar index drops below 97.8 from above 100, RMB usually rebounds.

### 4. Official Attitudes Toward the Exchange Rate

The PBOC influences the exchange rate through the midpoint rate mechanism. Recent observations show that official influence on short-term rates is significant, but the medium- and long-term trend still depends on market direction.

## 5-Year Review: The Long Cycle of RMB

- **2020:** Around 7.0 at start, dipped to 7.18 in May, rebounded to 6.50 by year-end, +6% appreciation.
- **2021:** Continued strength, fluctuated narrowly between 6.35-6.58, significant appreciation over the year.
- **2022:** Year of sharp depreciation, from 6.35 to 7.25, -8% for the year, the largest drop in recent years.
- **2023:** Continued pressure, between 6.83-7.35, averaging around 7.0.
- **2024:** Increased volatility, from 7.1 to 7.3, offshore RMB broke above 7.10 in H2.

The trend is clear: 2022-2023 was the bottom of depreciation, starting to rebound in 2024, and 2025 is a clear appreciation year.

## Offshore RMB (CNH): Greater Volatility Mirror

Offshore RMB in Hong Kong, Singapore, etc., trades freely without capital controls, making it more sensitive to global market sentiment. In 2025, CNH showed oscillations but overall trended upward. Early in the year, due to USD appreciation, it dipped below 7.36, but by December, it rose above 7.05, a rebound of over 4%.

**The fundamental difference between offshore and onshore reflects divergent market expectations—offshore more optimistic, onshore more cautious.**

## Final Advice

No matter how markets fluctuate, the long-term trend of the RMB exchange rate follows fundamental logic: policy direction, economic fundamentals, USD trend, and foreign capital flows. Master these elements, and you won’t be scared off by short-term volatility.

Currently, RMB is at the start of a new appreciation cycle. But this process could take years, not happen overnight. **Whether USD to RMB will fall to 6.7 or stay at 7.0 depends on how these variables evolve.**

One last reminder: the forex market is a two-way street, with large fluctuations. If you choose to participate in RMB trading, risk management should always come first.