Renminbi Trend Forecast 2026: The Exchange Rate Turning Point Has Appeared, How to Invest Properly in the Second Half of the Year?

Renminbi Appreciation Cycle Initiated? Clues from Recent Performance

Since 2025, the RMB exchange rate has undergone a structural shift. After three consecutive years of depreciation from 2022 to 2024, the RMB finally halted its decline. As of mid-December, USD to RMB has reached 7.0404, hitting a 14-month high. This signal suggests that the highly anticipated turning point for RMB appreciation in the RMB trend forecast may have already begun.

Specifically, this year, USD to RMB fluctuated bidirectionally between 7.04 and 7.3, with an overall appreciation of about 3%, demonstrating clear resilience. The offshore market was even more sensitive, with volatility between 7.02 and 7.40, more susceptible to international factors than the onshore market.

In the first half of the year, global tariff policy uncertainties and a strengthening US dollar index caused offshore RMB to temporarily break below 7.40, creating a new record since the 2015 “8.11 FX reform.” However, in the second half, as China-US trade negotiations advanced, signs of easing emerged, coupled with a weakening dollar index, leading RMB to gradually stabilize and rebound. Against the backdrop of major non-US currencies like the euro and pound appreciating, RMB also began a mild appreciation phase, with market sentiment stabilizing.

Historical Reflection: The Logic Behind the Five-Year Cycle

To understand the current RMB trend forecast, it is essential to review the exchange rate trajectory over the past five years.

Early 2020 COVID-19 outbreak, USD to RMB fluctuated between 6.9 and 7.0. Due to China-US trade tensions and pandemic impacts, RMB briefly depreciated to 7.18 in May. But as China quickly controlled the pandemic and recovered, the Fed cut rates to near zero, while China maintained prudent policies, expanding interest rate differentials supported RMB rebound, ending the year around 6.50, with a total appreciation of about 6%.

2021 continued strength, with China’s exports sustained growth and economic recovery. The central bank maintained a steady policy stance, and the USD index remained low. USD to RMB fluctuated narrowly between 6.35 and 6.58, maintaining relative strength.

2022 marked a turning point, as aggressive Fed rate hikes pushed the dollar index higher. USD to RMB rose from 6.35 to over 7.25, depreciating about 8% for the year, the largest decline in recent years. Meanwhile, China’s strict pandemic policies hampered economic growth, and a real estate crisis deepened market confidence issues.

2023 saw continued volatility, with exchange rates oscillating between 6.83 and 7.35, averaging around 7.0. China’s post-pandemic recovery was weaker than expected, the real estate debt crisis persisted, and US high interest rates remained, putting pressure on RMB.

2024 experienced increased volatility, as a weakening dollar eased RMB pressure. Fiscal stimulus and real estate support measures boosted market confidence. USD to RMB rose from 7.1 to around 7.3 mid-year, with increased fluctuations throughout the year.

Three Core Factors Determining Future RMB Trend Forecast

US Dollar Index Trend: From Strength to Weakness

In the first half of 2025, the dollar index fell from 109 at the start of the year to about 98, a decline of nearly 10%, marking the weakest first half since the 1970s. However, in November, expectations of Fed rate cuts cooled, and with US economic performance exceeding expectations, the dollar index rebounded, repeatedly surpassing 100.

Although a moderate strengthening of the dollar usually exerts pressure on RMB, the positive impact of China-US agreements temporarily offset the short-term USD rally’s impact on the FX market. After December, with the Fed’s rate cuts implemented and a dovish stance likely, the dollar index declined for several days, bottoming at 97.869, then returning to the 97.8-98.5 range.

China-US Negotiation Progress: Ceasefire and Uncertainty Coexist

In the latest China-US trade talks, both sides reached a consensus on a trade ceasefire. The US agreed to reduce tariffs on Chinese goods related to fentanyl from 20% to 10%, and to suspend the 24% retaliatory tariffs until November 2026. Both countries also agreed to delay export controls on rare earths and port fee measures, and to expand purchases of US soybeans and other agricultural products.

However, whether this ceasefire can be sustained long-term remains uncertain. A similar agreement reached in Geneva in May collapsed quickly. Therefore, the future development of China-US trade relations remains the most critical external factor in judging the USD/RMB exchange rate trend. If the status quo persists, RMB environment may stabilize; but if tensions escalate, markets will face renewed pressure, and RMB could weaken.

Federal Reserve and PBOC: The Policy Tug-of-War Between Two Major Central Banks

The Fed’s monetary policy is crucial for USD trend. In the second half of 2024, the Fed signaled rate cuts, but the magnitude and pace in 2025 may be constrained by inflation, employment, and policies of the Trump administration. If inflation remains above target, the Fed may slow or halt rate cuts, supporting a stronger dollar. Conversely, a significant economic slowdown could accelerate rate cuts, weakening USD.

RMB and USD index usually move inversely.

China’s central bank tends to maintain an accommodative monetary policy to support economic recovery, especially amid weak real estate and insufficient domestic demand. The People’s Bank may cut rates or reserve requirements to inject liquidity, which generally exerts downward pressure on RMB. But if easing policies and strong fiscal stimulus stabilize the economy, RMB could be supported long-term.

How Do International Institutions View RMB Outlook for 2026?

Market consensus suggests RMB is at a cycle turning point. The depreciation cycle starting in 2022 may have ended, and RMB could enter a new medium-to-long-term appreciation trajectory.

Looking towards late 2025 and 2026, three main factors will support RMB strength: sustained resilience in China’s export growth, the gradual reallocation of foreign capital into RMB assets, and a structurally weaker US dollar index.

Deutsche Bank analysis indicates that recent RMB strength against USD signals the start of a long-term appreciation cycle. The bank projects RMB/USD will rise to 7.0 by late 2025 and further to 6.7 by the end of 2026.

Goldman Sachs, a leader in global FX strategy, caused a stir in the investment community. Goldman unexpectedly raised its 12-month USD/RMB forecast from 7.35 to 7.0, predicting the RMB could “break 7” sooner than market expectations.

Goldman’s logic is that the current real effective exchange rate of RMB is undervalued by 12% relative to the ten-year average, and by 15% against the USD. Based on progress in China-US trade negotiations and the undervaluation, they expect RMB to appreciate to 7.0 within 12 months. Goldman also notes that strong Chinese exports will support RMB, and the Chinese government is more likely to use other policy tools to boost the economy rather than pursue currency depreciation.

Three Core Considerations for Investing in RMB

In the current environment, investing in RMB-related currencies can be profitable, provided the timing is right.

RMB is expected to remain relatively strong in the short term, generally moving inversely to USD with limited amplitude. Rapid appreciation below 7.0 before late 2025 is less likely.

Key variables to monitor include: USD index trend, RMB midpoint policy signals, and the strength and pace of China’s stabilizing growth policies.

Four Investment Strategies to Judge RMB Trend Forecast

It’s better to teach a person how to fish than give them fish. Mastering the following four dimensions will help you understand the RMB trend forecast regardless of market changes.

First Dimension: Central Bank Monetary Policy Cycle

The People’s Bank’s monetary policy influences money supply, which naturally affects exchange rates. When policies are accommodative (rate cuts or reserve requirement reductions), expectations of increased supply weaken RMB; when policies tighten (rate hikes or reserve ratio increases), liquidity tightens, supporting RMB appreciation.

For example, starting November 2014, the PBOC entered a loosening cycle, cutting loan rates six times and continuously lowering reserve requirements. During this period, USD to RMB rose from around 6 to nearly 7.4, illustrating the significant impact of monetary policy on exchange rates.

Second Dimension: Signals from China’s Economic Data

When China’s economy grows steadily or outperforms other emerging markets, it attracts sustained foreign capital inflows, increasing demand for RMB and supporting its appreciation. Conversely, economic slowdown or reduced attractiveness diminishes foreign inflows, weakening RMB.

Important economic indicators include:

• Gross Domestic Product (GDP): released quarterly, reflects macroeconomic health, key for investors
• Purchasing Managers’ Index (PMI): monthly, compiled by official and Caixin, for manufacturing and services
• Consumer Price Index (CPI): monthly, measures inflation, indirectly indicating economic heat
• Urban Fixed Asset Investment: monthly, from NBS, reflects construction and asset acquisition activity

Third Dimension: Leading Signals from Global USD Trends

USD movement directly impacts USD/RMB. The Federal Reserve and European Central Bank’s policies are often key drivers.

In early 2017, the Eurozone experienced its strongest recovery since the sovereign debt crisis, with GDP growth surpassing the US. The ECB signaled tightening, boosting the euro. Meanwhile, after the USD index broke above 100, it weakened, with capital flowing into euros, causing the USD index to fall 15% for the year. During the same period, USD/RMB also declined, showing high correlation.

Fourth Dimension: Official Policy Orientation on Exchange Rate

Unlike freely floating, market-determined currencies, RMB has undergone multiple exchange rate management reforms since 1978. The latest adjustment on May 26, 2017, changed the RMB midpoint pricing model from “closing price + a basket of currencies” to “closing price + basket + counter-cyclical factor,” easing market pro-cyclicality and strengthening official guidance.

Recent observations suggest this approach and pricing mechanism influence short-term exchange rates significantly, but the medium- and long-term trend still follows the overall currency market direction.

Offshore RMB Performance More Worth Watching

Because offshore RMB (CNH) trades more freely in international markets like Hong Kong and Singapore, with capital flows less restricted, it better reflects global market sentiment. Onshore RMB (CNY), subject to capital controls and PBOC interventions via midpoint and FX management, tends to be less volatile, but CNH exhibits larger fluctuations.

In 2025, despite multiple fluctuations, offshore RMB against USD showed an overall oscillating upward trend. Early in the year, US tariff policies and a soaring dollar index to 109.85 caused CNH to dip below 7.36, prompting the PBOC to take measures such as issuing 60 billion yuan offshore bonds to stabilize liquidity and controlling the midpoint.

Recently, as China-US trade dialogue eased, China’s steady growth policies took effect, and market expectations of Fed rate cuts increased, CNH appreciated significantly. On December 15, CNH broke through 7.05, rebounding over 4% from the early-year high, hitting a 13-month high.

Summary

As China enters a sustained easing monetary policy cycle, the USD/RMB trend has become more pronounced, with cycles potentially lasting up to ten years based on historical policy-driven patterns. Short-term performance will still be influenced by USD movements and other events.

The RMB trend forecast hinges on understanding these key factors, greatly increasing profit potential. Since the FX market is primarily macro-driven, with transparent data releases and large trading volumes, it offers a relatively fair and advantageous investment environment for individual investors.