RMB to USD key points are urgent, why do institutions remain optimistic about continued strength in 2026

The year-end foreign exchange market experiences a dramatic turn. On December 25th, the USD against offshore RMB fell to 6.9965, marking the first time since September 2024 to stabilize above the critical 6.9 level; onshore RMB also declined to 7.0051 against the USD, hitting a new low since May 2023. Behind this rapid strengthening, the market has sensed signals from the central bank allowing the RMB to appreciate temporarily.

Year-End Foreign Exchange Settlement Wave Becomes a Recent Catalyst

Looking back to 2025, China’s exports accumulated a huge trade surplus. As the year-end approached, export companies concentrated on settling foreign exchange and converting to RMB, creating a surge in foreign exchange purchases that directly boosted the RMB’s value. Although this seasonal phenomenon is common, combined with other factors, it formed a synergistic effect.

Central Bank Attitude Shift Boosts Appreciation Logic

Deeper motivation comes from policy. Observing the Chinese central bank’s operations throughout the year, it has continuously raised the midpoint of the RMB exchange rate, signaling a clear intention to appreciate. In contrast, the central bank remains cautious about further interest rate cuts. This combination of “loose exchange rate, tight monetary policy” demonstrates the decision-makers’ stance—guiding the RMB to appreciate moderately has become a policy consensus.

USD Weakness Accelerates RMB’s Relative Strength

On a macro level, the USD itself is weakening. During the Federal Reserve’s rate cut cycle, the USD index has fallen over 10% since the beginning of the year, with a decline of over 2% in recent months. Amid this wave of USD weakness, the RMB, as an important reserve currency, has gained opportunities to rise.

Institutional Divergence: How Much Appreciation Is Possible in 2026

Regarding the outlook for next year, market opinions are diverging interestingly.

Senior strategist Xing Zhaopeng from ANZ Bank is relatively conservative, believing that in the first half of 2026, USD against RMB will hover between 6.95 and 7.00, implying limited appreciation potential.

Goldman Sachs’ view is more aggressive—its research indicates that, based on economic fundamentals and trade-weighted levels, the RMB is undervalued by 25%. Based on this assessment, Goldman Sachs expects USD/RMB to fall to 6.90 by mid-2026 and further weaken to 6.85 by the end of the year.

Bank of America bets on a phased easing of US-China relations, believing that in 2026, the scale of foreign exchange settlement and sales by Chinese exporters will further expand, with the USD/RMB possibly falling to 6.80 by year-end, representing the most optimistic appreciation.

Wang Qing, Chief Macro Analyst at Orient Securities, pointed out that the continuous appreciation of the RMB not only directly benefits trade but more importantly enhances China’s capital market attractiveness to overseas investors—this involves China’s long-term position in global capital flows.

Conclusion: Balancing Appreciation Potential and Risks

Overall, the RMB/USD exchange rate is showing an appreciation trend driven by multiple factors resonating together. From the breakthrough trend at year-end, most institutions now see continued RMB appreciation in 2026 as a basic consensus, with disagreements only on the magnitude of the rise. However, the realization of this appreciation outlook depends on the USD trend, the relative performance of the Chinese and US economies, and the sustained stability of central bank policies.