The future trend of the Renminbi is upward, and it is expected to challenge the 6.7 level in 2026.

After three years of continuous depreciation, the RMB exchange rate has finally reversed. Successfully breaking the psychological threshold of 7.0 by the end of 2025, the RMB’s future trend shows a clear appreciation trajectory. Now, at the critical juncture of 2026, major international investment banks are optimistic about the RMB outlook, expecting it to further appreciate to the 6.7–6.85 range this year. What does this turning point reflect? How will the RMB perform in the future? This article will analyze this important market shift in depth.

End of the Three-Year Depreciation Period, RMB Enters a New Appreciation Cycle

From 2022 to 2024, the RMB experienced an unprecedented nearly three-decade-long downward pressure. The USD/RMB exchange rate rose from 6.35 at the start of the year to over 7.25, with an annual depreciation of 8%, marking the largest decline in recent years. During this period, aggressive Fed rate hikes, the US dollar index soaring to historic highs, and China’s real estate crisis all jointly pressured the RMB.

However, in 2025, the situation changed. Throughout last year, USD/RMB fluctuated within a broad range of 6.95 to 7.35, appreciating about 4%. Especially in the second half, as China-US trade negotiations advanced steadily, the US dollar index weakened, and the Fed shifted to a more dovish stance, the RMB began a gentle appreciation.

December 2025 marked a key turning point. Driven by Fed rate cuts and improved market sentiment, the RMB strengthened past the 7.05 level. By December 30, the RMB officially broke through the psychological 7.0 barrier, reaching around 6.9623. This breakthrough is highly symbolic, indicating that the RMB may enter a new phase of medium- to long-term appreciation.

Weakening US Dollar, Easing China-US Trade Tensions, Four Major Supports for RMB Future

To understand the outlook for the RMB, four core variables that determine the exchange rate direction must be examined.

Structural Weakening of the US Dollar Index

In 2025, the US dollar index experienced significant volatility. In the first half, it dropped sharply from 109 to about 98, a nearly 10% decline. Although it briefly rebounded in November due to expectations of Fed rate cuts easing, after January 2026, with the Fed officially entering a new easing cycle, the dollar index fell back to 98.8–98.2. Mild dollar strengthening usually puts pressure on the RMB, but the global de-dollarization trend and the dovish stance of the Fed provide external support for the RMB to maintain the “6 era.”

Substantive Progress in China-US Trade Relations

In recent China-US trade talks in Kuala Lumpur, both sides reached a truce agreement. The US agreed to reduce tariffs on Chinese goods related to fentanyl from 20% to 10%, and the 24% ad valorem tariff component will remain suspended until November 2026. Both countries also agreed to delay export controls on rare earths and port fee measures, and to expand purchases of US agricultural products. Although this balance remains fragile, if maintained, the RMB exchange rate environment is expected to stabilize. This is the most critical external uncertainty factor in assessing the RMB’s future trend.

Fed Entering an Easing Cycle

The US Federal Reserve’s monetary policy is crucial for the USD and RMB exchange rates. Market expectations for 2026 still include 2–3 rate cuts. As the labor market approaches balance, the Fed’s focus has shifted to preventing a hard landing. This preemptive rate cut weakens US bond yields, alleviates interest rate differentials, and encourages capital to flow back into emerging markets, thereby supporting the RMB.

China’s Expected Steady Growth Policies

The People’s Bank of China (PBOC) tends to maintain an accommodative monetary policy to support economic recovery. Especially amid a sluggish real estate market and weak domestic demand, the PBOC may cut interest rates or reserve requirements to inject liquidity. If accommodative monetary policy combined with stronger fiscal stimulus stabilizes China’s economy, it will provide long-term support for the RMB.

International Investment Banks’ Forecasts: RMB Target Range 6.7–6.85

Based on the above analysis framework, top international banks are optimistic about the RMB’s future.

Deutsche Bank notes that recent RMB strength against the dollar may signal the start of a long-term appreciation cycle. They project RMB could further rise to 6.7 in 2026, a key target for this year.

Goldman Sachs also sees a positive outlook, with a target of 6.85 for the RMB in 2026.

These forecasts reflect a market consensus: there remains upside potential for the RMB. Driven by China’s resilient trade, foreign capital reallocating into RMB assets, and structural weakening of the dollar, the RMB is expected to continue appreciating.

Analyzing RMB Trends from Policy, Data, and Dollar Dimensions

To accurately gauge the RMB’s future, investors need not wait for expert opinions but should focus on four key dimensions. This approach ensures that even if market conditions change, the underlying logic remains valid.

Dimension 1: People’s Bank of China’s Monetary Policy Orientation

Monetary policy directly influences money supply and thus exchange rates. When policies are accommodative (rate cuts or reserve requirement reductions), increased supply tends to weaken the RMB; tightening policies (rate hikes or reserve ratio increases) tend to strengthen it.

For example, in 2014, the PBOC launched a loosening cycle, cutting loan rates six times and significantly lowering reserve requirements for small and medium banks from 18% to below 8%. During the same period, USD/RMB rose from 6 to nearly 7.4, illustrating the profound impact of monetary policy on the exchange rate.

Monitoring PBOC’s policy moves—such as rate cuts and reserve requirement adjustments—is essential for predicting RMB trends.

Dimension 2: China’s Economic Data Strength

China’s economic performance is decisive for the RMB. When China’s economy grows steadily or outperforms other emerging markets, foreign capital inflows increase, boosting demand for the RMB and leading to appreciation. Conversely, economic weakness exerts downward pressure.

Key indicators include:

• GDP: Released quarterly, reflecting macroeconomic health.

• PMI (Purchasing Managers’ Index): Both official and Caixin PMI, released monthly, serve as leading indicators. Official PMI focuses on large and medium enterprises; Caixin covers small and medium enterprises.

• CPI (Consumer Price Index): Measures inflation; high inflation may trigger monetary tightening.

• Urban Fixed Asset Investment: Indicates investment trends and economic growth expectations.

Better-than-expected data increases foreign inflows and the likelihood of RMB appreciation.

Dimension 3: USD Index and Fed Policy Interaction

The USD’s movement directly affects USD/RMB. The Fed and ECB’s monetary policies are key drivers.

A classic example is 2017, when the Eurozone’s economic recovery outpaced the US, and the ECB signaled tightening. The euro strengthened, and the USD index fell 15%. Simultaneously, USD/RMB declined, showing a strong correlation. Tracking USD index trends and Fed signals is vital for RMB outlooks.

Dimension 4: Official Exchange Rate Policies

Unlike freely floating currencies, the RMB’s exchange rate is managed with guidance. In May 2017, China improved the RMB/USD central parity quoting model by adding a “counter-cyclical factor,” aiming to mitigate market-driven over- or under-valuation and strengthen official guidance.

While short-term movements are influenced by central parity adjustments, long-term trends depend on broader market fundamentals. Monitoring the central parity and policy signals helps assess short-term risks of rapid appreciation or depreciation.

Should You Buy RMB Now? Trading Opportunities in a Short-Term Bullish Environment

Understanding the RMB’s future trajectory is key to timing investments.

In the short term, the RMB is expected to remain in a strong, oscillating pattern. After breaking the 7.0 psychological barrier at the end of 2025, it shows a deep correlation with the dollar index, with strong support around 6.9. Since early 2026, it has stabilized below 7.0, making a quick drop below 7.1 unlikely. The market is searching for a new equilibrium between 6.90 and 7.00.

Key variables to watch:

1. How much room is there for the dollar index to decline? Will Fed rate cuts in 2026 further weaken the dollar? This directly affects short-term support levels for RMB.

2. Will regulators use the central parity to signal preventing rapid appreciation? This influences the pace of RMB appreciation.

3. How strong will China’s steady growth policies be in 2026? Will they support domestic demand and the stock market, establishing a long-term bottom for the RMB?

From an investment perspective, RMB-related currency pairs offer profit opportunities, but timing is crucial. In a strong short-term environment with policy balancing, aggressive one-sided positions should be cautious. Instead, phased accumulation or arbitrage strategies are worth considering.

Five-Year Historical Review: The Logic Behind RMB Future Trends

Reviewing the past five years offers valuable insights into RMB movements.

2020 Pandemic Reversal

Early 2020, USD/RMB fluctuated between 6.9 and 7.0. Due to US-China trade tensions and COVID-19, RMB depreciated to 7.18 in May. But as China quickly controlled the pandemic and economic recovery accelerated, coupled with Fed rate cuts to near zero and China’s steady policies, the RMB rebounded strongly to around 6.50 by year-end, appreciating about 6%.

2021 Stable Period

China’s exports remained strong, the economy improved, and the PBOC maintained prudent policies. USD index stayed low, and USD/RMB fluctuated narrowly between 6.35 and 6.58, averaging about 6.45, with the RMB remaining relatively strong.

2022 Major Depreciation

This year marked a turning point, with USD/RMB rising from 6.35 to over 7.25, a depreciation of about 8%. Aggressive Fed rate hikes boosted the dollar index; strict COVID policies and a real estate crisis dragged down the economy, damaging market confidence and causing a perfect storm for the RMB.

2023 Continued Pressure

USD/RMB ranged from 6.83 to 7.35, averaging around 7.0, ending near 7.1. China’s post-pandemic recovery was weaker than expected, the real estate debt crisis persisted, and consumption remained sluggish. Meanwhile, high US interest rates kept the dollar strong, maintaining downward pressure on the RMB.

2024 Turning Point

The dollar weakened, easing RMB pressure. China’s fiscal stimulus and real estate measures boosted confidence. USD/RMB rose from 7.1 at the start to about 7.3 mid-year, with offshore RMB breaking 7.10 for the first time in half a year. Volatility increased, hinting at an upward trend.

This five-year cycle reveals a key logic: RMB exchange rate ultimately depends on relative economic fundamentals, monetary policy differences, and the dollar index’s direction. When China’s policies are accommodative, the economy is stable, and the dollar weakens, the RMB appreciates; otherwise, it depreciates. The future trend hinges on the combination of these factors.

Summary: The Investment Logic for RMB Future Movements

The RMB has successfully reversed a three-year depreciation, entering a new appreciation cycle. Supported by China’s trade resilience, foreign capital reallocation into RMB assets, and structural weakening of the dollar, the RMB’s upside potential is opening up. Predictions by Deutsche Bank and Goldman Sachs—targeting 6.7 to 6.85 in 2026—provide professional backing for this outlook.

However, investors should not overly rely on forecasts but focus on core judgment dimensions: monitor PBOC policies, track China’s economic data, observe USD trends and Fed policies, and pay attention to official exchange rate guidance. These four dimensions form a robust analytical framework. Regardless of market fluctuations, this logic remains valid.

In the short term, the RMB is in a strong oscillation phase, offering trading opportunities, but timing is critical. In the medium to long term, the upward trend is established, but its sustainability depends on China-US trade stability, China’s economic stabilization, and global dollar dynamics. For forex investors, now is an excellent time to learn this framework and build a solid investment approach.