USD to RMB exchange rate 2026 outlook: Is it a good time to get in now? Opportunities in the second half based on data

RMB Status Quo: From Depreciation Turnaround to Appreciation Expectations

The performance of the RMB in 2025 can be described as a “bright future after darkness.” From volatility at the beginning of the year to a strong rebound by the end of November, the USD to RMB exchange rate dropped from the peak of around 7.4 to 7.0765, hitting a nearly one-year high. What does this shift signify? It indicates that the three-year depreciation cycle starting in 2022 may have come to an end.

The main reasons for RMB pressure in the first half of the year are simple—global tariff uncertainties and a strengthening US dollar index. Offshore RMB once fell below 7.40, and the USD to RMB exchange rate even refreshed the record since the 2015 exchange rate reform. However, in the second half, as US-China trade negotiations advanced and the dollar index turned downward, the RMB began a moderate yet steady rise.

Can Investing in RMB-Related Currency Pairs Be Profitable? Timing Is Key

The answer is yes.

Within the current window, the RMB is expected to maintain a relatively strong pattern, showing inverse fluctuations with the US dollar. However, it’s important to note that the probability of a rapid appreciation breaking through 7.0 before the end of 2025 is not high—this requires investors to precisely grasp the timing.

Key uncertainties for the next three months include:

• The further trajectory of the US dollar index
• Policy guidance on the RMB midpoint rate
• The actual effects of China’s steady growth measures

Five-Year Review: Why the RMB Went from Appreciating to Depreciating and Back to Appreciating

To understand the present, we must look clearly at the past.

2020 Turning Point: In early 2020, the RMB fluctuated between 6.9 and 7.0, depreciating to 7.18 during the initial outbreak of the pandemic. But as China took the lead in controlling the pandemic and economic recovery began, coupled with Federal Reserve rate cuts and China’s prudent policies, the widening interest rate differential supported a strong rebound of the RMB to 6.50, appreciating 6% for the year.

2021 Peak: China’s exports remained strong, the central bank maintained stable policies, and the US dollar index was low. The RMB stabilized between 6.35 and 6.58, marking one of its strongest periods in recent years.

2022 Collapse: The Federal Reserve’s aggressive rate hikes pushed the dollar index higher. Meanwhile, China’s pandemic control measures and a real estate crisis dragged down the economy. The RMB depreciated from 6.35 to over 7.25, with an 8% depreciation for the year—the largest decline in recent years. This year marked a watershed.

2023 Fluctuation: The exchange rate oscillated between 6.83 and 7.35, reflecting slower-than-expected economic recovery, unresolved real estate debt issues, and a stalemate caused by high US interest rates.

2024 Dawn: The weakening dollar provided relief, and China’s fiscal stimulus and real estate support policies reversed expectations. The RMB rose from 7.1 to 7.3, with increased volatility but a clear upward trend.

These five years demonstrate that the long-term direction of the RMB exchange rate is determined by three factors: the US dollar index, China’s economic outlook, and interest rate differentials.

Where Will the RMB Be in 2026? Predictions from International Investment Banks

Major international investment banks generally hold a positive outlook on the RMB:

Deutsche Bank believes the RMB has entered a long-term appreciation cycle, forecasting the USD to 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 predicts the US dollar will weaken continuously over the next two years, expecting the dollar index to fall to 89 by 2026, with the RMB/USD exchange rate potentially reaching 7.05.

Goldman Sachs is the most aggressive. Its global FX strategy head, in a May report, raised the 12-month exchange rate forecast from 7.35 to 7.0, claiming that the “break of 7” for the RMB might happen sooner than market expectations. Goldman’s logic is: The real effective exchange rate of the RMB is undervalued by 12% relative to its 10-year average, and 15% undervalued against the dollar, indicating significant potential for appreciation. The bank states that strong Chinese exports and the government’s preference for fiscal rather than devaluation to stimulate the economy support the RMB. Specific targets are 7.2 in 3 months and 7.1 in 6 months.

The consensus among these forecasts is clear: The RMB appreciation cycle is beginning, but it will take time to unfold.

Four Major Drivers of USD to RMB Exchange Rate

US Dollar Index: The most active short-term variable

In the first five months of 2025, the dollar index plummeted 9%, marking the worst start in years. The market generally believes that the Federal Reserve’s rate cut cycle is about to begin, and the dollar may further depreciate over the next 12 months. This directly benefits the RMB and other Asian currencies.

US-China Trade Dynamics: Decisive Variable

Although tensions eased after London talks, doubts remain about their durability. Escalation of tariff conflicts will directly pressure the RMB, while easing provides support. This is the biggest policy uncertainty.

Federal Reserve’s Monetary Policy Choices

The pace of rate cuts directly influences the strength of the dollar. If inflation remains high, the Fed may slow down rate cuts, supporting the dollar. Conversely, a quick pivot to easing would weaken it. The RMB and the dollar index usually move inversely.

PBOC’s Policy Orientation and Exchange Rate Management

The central bank maintains a loose monetary policy to support economic recovery, which in the short term exerts downward pressure on the RMB. However, if loose policies are combined with fiscal stimulus to stabilize the economy, it is beneficial for the RMB in the long run. Additionally, the PBOC’s guidance through the midpoint rate quoting model (including countercyclical factors) should not be overlooked—this has the most immediate short-term impact on the exchange rate.

Four Dimensions Investors Must Monitor

1. Watch the PBOC’s monetary policy stance

Easing measures like rate cuts and reserve requirement ratio reductions increase money supply, short-term weakening the RMB. Historical example: After the PBOC started a rate cut cycle in 2014, USD/RMB rose from 6 to 7.4. Conversely, tightening policies support the RMB.

2. Track key Chinese economic data

GDP (quarterly release) reflects overall macroeconomic health
PMI (monthly release) from official and Caixin sources gauges economic activity
CPI (monthly release) high inflation may trigger policy tightening
Urban Fixed Asset Investment (monthly release) indicates investment momentum

Strong economic data attract foreign capital inflows, increasing demand for the RMB.

3. Follow the USD index trend

The USD and RMB exchange rate are highly correlated but move inversely. For example, in 2017, when the Eurozone economy outperformed the US and the ECB signaled tightening, the dollar index fell 15% for the year, and the RMB depreciated in tandem.

4. Interpret official exchange rate policy signals

The RMB is not a fully freely convertible currency. In May 2017, the PBOC adjusted the midpoint rate quoting model by adding a “countercyclical factor,” strengthening guidance over the exchange rate. In the short term, this has a noticeable impact, but the overall direction depends on market trends in the medium to long term.

Five Ways to Invest in RMB

Through Banks

Open foreign exchange accounts at local commercial banks or international banks for trading and investment.

Forex Broker Platforms

Partner with reputable forex brokers; online trading platforms offer convenience and tools. They typically support both long and short positions, allowing investors to profit from both appreciation and depreciation.

Leverage Trading and Risk Management

Most forex platforms offer leverage from 1-200 times, enabling small capital to control larger positions. However, leverage amplifies risks, so it must be used with stop-loss, take-profit, trailing stops, and negative balance protection.

Criteria for Choosing Legitimate Platforms

Platforms should have authoritative regulatory licenses, transparent trading fees, and comprehensive risk management tools. Mainstream options include Mitrade, XTB, Admirals, Plus500, IG, among others.

Securities Firms and Futures Exchanges

Some securities firms offer forex trading services, and futures exchanges provide forex futures trading channels.

Final Advice

The cycle shift from RMB depreciation to appreciation has already begun. This process may last around ten years, with short- and medium-term fluctuations driven by USD movements and political events.

The key is to grasp macro factors: Federal Reserve policies, US-China trade developments, Chinese economic data, and PBOC’s exchange rate guidance encompass most of the decisive information. The forex market is transparent, liquid, and offers a relatively fair two-way trading mechanism—making it a good choice for individual investors—provided they understand the mechanisms, control risks, and select platforms carefully.

Now is the time to prepare for the next phase of USD to RMB exchange rate movements.