The Chinese yuan is strengthening! Multiple experts say that two-way fluctuations remain the trend

Since 2026, the RMB exchange rate has been “rising consecutively.” In the week before the Spring Festival, both onshore and offshore RMB against the US dollar broke through the 6.9 mark. During the Spring Festival holiday from February 16 to 20, the offshore RMB against the US dollar appreciated by a total of 0.06%.

Experts say that the RMB’s strengthening against the US dollar is influenced by favorable external environment changes and increased corporate foreign exchange settlement demand. This year, the RMB exchange rate is likely to show a pattern of “fundamentals support and market two-way fluctuations.”

Settlement demand may be accelerating

During the Spring Festival holiday, the onshore RMB market was closed, and the offshore RMB against the US dollar generally appreciated. Wind data shows that from February 16 to 20, the offshore RMB appreciated by a total of 0.06%.

The recent RMB appreciation is partly due to concentrated settlement demand. Wang Qing, Chief Macroeconomic Analyst at Dongfang Jincheng, said that at the end of the year, increased corporate settlement demand led to seasonal strengthening of the RMB; especially after the RMB continued to appreciate against the dollar recently, settlement demand may be accelerating.

“At the end of January this year, foreign exchange reserves increased by $41.2 billion compared to the end of December 2025, and the central bank has been increasing gold holdings for the 15th consecutive month, reinforcing market confidence in the stability of cross-border capital flows,” said Pang Ming, a senior researcher at the National Financial and Development Laboratory.

Changes in the external environment have also boosted the RMB’s strength. Wang Qing noted that the Federal Reserve’s independence has been challenged, and the new Fed chair’s stance of ‘rate cuts and balance sheet reduction’ has not reversed the dollar’s decline. Non-US currencies are generally appreciating, which has helped the RMB strengthen accordingly.

Two-way fluctuations remain the trend

Several experts believe that this year, the RMB exchange rate is likely to continue its pattern of two-way fluctuations and moderate appreciation.

Wang Qing said that in the first quarter, China’s exports are expected to continue growing rapidly, and the settlement demand from enterprises before the Spring Festival may persist. The possibility of a sharp rebound in the US dollar index in the short term is low, and the RMB is expected to remain relatively strong after the festival.

Considering multiple domestic and international factors, Xiong Yuan, Chief Economist at Guosheng Securities, stated that the domestic economy is generally growing steadily, and external risks are relatively controllable. He predicts that the RMB against the US dollar will likely stay between 6.8 and 7.1, with overall stability and slight appreciation.

Guan Tao, Chief Economist at Bank of China Securities, said that factors influencing the RMB’s rise and fall coexist this year. While optimistic about the RMB, one should not ignore potential adjustments.