Is it worth exchanging RMB for USD? 2025 Second Half Exchange Rate Trend Analysis and Investment Guide

The New Cycle of RMB Appreciation Has Started: Why Are More Investors Considering Converting RMB to USD Now?

Since mid-December 2025, the RMB against the US dollar has strongly broken through the 7.05 level, then further surpassed 7.04, hitting a new high in nearly 14 months. This round of appreciation has prompted many investors to re-examine a core question: Is converting RMB to USD worth it?

The answer isn’t that simple. To determine if it’s worthwhile, one must first understand the underlying logic.

Since 2025, the RMB exchange rate has experienced a turning point from depreciation to appreciation. The USD against RMB fluctuated bidirectionally within the 7.04 to 7.3 range throughout the year, with a cumulative appreciation of about 3%. More notably, this shift broke the three-year trend of RMB depreciation against the dollar from 2022 to 2024, signaling that RMB may be entering a new round of appreciation.

In the offshore market, the USD against offshore RMB has fluctuated between 7.02 and 7.4. In the first half of this year, under the dual pressures of increased global tariff uncertainties and a strengthening US dollar index, offshore RMB once depreciated past 7.40, even reaching a new record since the 8.11 exchange rate reform in 2015. However, in the second half, as US-China trade negotiations steadily advanced and the dollar index weakened, the RMB exchange rate gradually stabilized and began to appreciate.

Why Is the RMB Appreciating Now? Three Core Factors Driving the Exchange Rate

1. US Dollar Index Shift from Strengthening to Adjustment

In the first half of 2025, the US dollar index declined from 109 at the start of the year to about 98, a drop of nearly 10%, marking the weakest first half since the 1970s. After November, despite a brief rebound and breaking through 100 due to market expectations of Fed rate cuts cooling, by December, the Fed cut rates as scheduled, and the dollar index fell again, reaching a low of 97.869, settling in the 97.8-98.5 range.

A moderate strengthening of the US dollar usually exerts pressure on the RMB, and vice versa. The current adjustment of the dollar index directly benefits RMB appreciation.

2. Signs of Easing in US-China Trade Relations

In the latest round of US-China economic and trade talks, both sides reached a new trade truce consensus. The US will reduce tariffs on Chinese goods related to fentanyl from 20% to 10%, and suspend the 24% retaliatory tariffs until November 2026. Both countries also agreed to temporarily halt measures such as rare earth export controls and port fees, and expand US agricultural product purchases.

The achievement of these agreements has significantly reduced market concerns about further trade conflicts, providing psychological support for RMB appreciation. However, it’s worth noting that the Geneva agreement in May this year quickly fell apart, so the durability of this truce remains to be seen.

3. The Fed Enters a Moderate Rate Cut Cycle

The Federal Reserve’s policy stance is crucial for the dollar’s trend. Since the second half of 2025, the Fed has begun a rate-cutting process, which usually weakens the dollar’s attractiveness. Because the RMB and the dollar index often move inversely, this rate-cut cycle tends to support RMB appreciation.

How Do International Investment Banks View It? Multiple Institutions Expect RMB to Continue Appreciating

The market generally believes that the RMB exchange rate is at a cycle turning point, ending the depreciation cycle that began in 2022, and the RMB may enter a new medium- to long-term appreciation trajectory.

Deutsche Bank’s Forecast

Deutsche Bank analysts suggest that the recent strength of the RMB against the dollar may indicate the start of a long-term appreciation cycle. The bank estimates that the RMB/USD exchange rate will rise to 7.0 by the end of 2025 and further to 6.7 by the end of 2026, with an appreciation potential of about 4.4%.

Goldman Sachs’ Optimism

In a May report, Goldman Sachs’ global FX strategy head significantly raised their forecast for the USD/RMB exchange rate over the next 12 months from 7.35 to 7.0, and predicted that the RMB “breaking 7” could happen sooner than the market expects.

Goldman Sachs’ logic is based on an assessment of the RMB’s true value. Currently, the real effective exchange rate of RMB is undervalued by 12% relative to its ten-year average, with an undervaluation against the USD of about 15%. Based on progress in US-China trade negotiations and the current undervaluation of the RMB, it is expected that the USD/RMB rate will rise to 7.0 within the next 12 months. Additionally, Goldman Sachs believes that strong Chinese exports will support the RMB, and that the Chinese government is more inclined to use other policy tools to boost the economy rather than pursue currency depreciation strategies.

Is Converting RMB to USD Worth It? Investment Timing Judgment

Brief answer: It’s possible in the short term, but timing is key.

Based on current analysis:

• Short-term trend: The RMB is expected to remain relatively strong in the near term, with inverse fluctuations against the dollar within a limited range. The rapid appreciation into below 7.0 before the end of 2025 is less likely, but a slow appreciation trend should persist.

• Medium-term outlook: If US-China relations remain stable, the RMB exchange rate environment is likely to stabilize. This means investing in RMB-related currency pairs could be profitable, but both the magnitude and timing need careful management.

• Three key variables to monitor:

  1. US dollar index trend — If the dollar strengthens again, RMB appreciation momentum will weaken
  2. RMB midpoint rate guidance signals — The People’s Bank of China’s guidance will directly influence market expectations
  3. The strength and pace of China’s stabilizing growth policies — Economic stability determines foreign capital inflow willingness

How to Forecast the Future of RMB? Four Core Factors to Grasp the Big Picture

To judge whether converting RMB to USD is worthwhile, investors need to continuously monitor the following four dimensions:

Factor 1: China’s Central Bank Monetary Policy

The People’s Bank of China’s monetary policy directly impacts RMB supply and thus the exchange rate. When monetary policy is loose (rate cuts, reserve ratio reductions), RMB tends to weaken; when tightening (rate hikes, reserve ratio increases), RMB tends to strengthen.

For example, starting November 2014, the PBOC entered a loosening cycle, cutting rates six consecutive times, and significantly lowering reserve requirements for small and medium financial institutions from 18% to below 8%. During this period, USD/RMB rose from 6 to nearly 7.4 at its peak, illustrating the policy’s impact.

Currently, the PBOC tends to maintain a loose policy to support economic recovery, especially amid a sluggish property market. This generally exerts downward pressure on the RMB. However, if loose policies combined with fiscal stimulus stabilize the economy, the long-term outlook could support RMB appreciation.

Factor 2: China’s Economic Data Performance

When China’s economy remains stable or outperforms other emerging markets, it attracts sustained foreign investment, increasing demand for RMB and strengthening it; the opposite is also true.

Key economic indicators to watch include:

• GDP — released quarterly, reflecting macroeconomic conditions
• Manufacturing PMI and Services PMI — official and Caixin versions, indicating business sentiment
• Consumer Price Index (CPI) — measures inflation, influencing monetary policy
• Urban Fixed Asset Investment — reflects economic momentum and policy effects

Factor 3: US Dollar and Fed Policies

The USD’s trend directly affects USD/RMB movements. The Fed and ECB’s monetary policies are often key drivers of the dollar’s trend.

In early 2017, the Eurozone experienced its strongest recovery since the European debt crisis, with GDP growth surpassing the US. The European Central Bank signaled tightening policies multiple times, boosting the euro. Meanwhile, the USD index fell 15% over the year, and USD/RMB also declined, demonstrating their high correlation.

Factor 4: Official Exchange Rate Policy Orientation

Unlike freely convertible currencies, RMB’s exchange rate management has undergone multiple reforms. The last comprehensive adjustment was on May 26, 2017, which changed the RMB/USD midpoint pricing model to “closing price + a basket of currencies exchange rate changes + counter-cyclical factor,” strengthening official guidance.

Recent observations show this mechanism has a clear short-term influence on the exchange rate, but the medium- to long-term trend is still determined by the overall direction of the currency market.

Five-Year Review: Understanding RMB Exchange Rate Cycles

2020: Appreciation During the Pandemic

At the start of 2020, USD/RMB fluctuated between 6.9 and 7.0. Due to US-China trade tensions and the pandemic, RMB depreciated to 7.18 in May. But as China quickly controlled the pandemic and led economic recovery, coupled with the Fed’s near-zero rates and China’s steady policies, the interest rate differential widened, supporting RMB’s strong rebound to around 6.50 by year-end, with an appreciation of about 6%.

2021: Strong Consolidation

China’s exports remained robust, the economy improved, and the central bank maintained steady policies, while the dollar index hovered low. USD/RMB fluctuated narrowly between 6.35 and 6.58, with an average around 6.45, maintaining relative strength.

2022: Significant Depreciation

USD/RMB rose from 6.35 to over 7.25, depreciating about 8% for the year, the largest decline in recent years. Causes include aggressive Fed rate hikes, soaring dollar index, and China’s strict pandemic controls dragging on the economy, along with a worsening real estate crisis.

2023: Volatile Consolidation

USD/RMB fluctuated between 6.83 and 7.35, averaging about 7.0, ending near 7.1. China’s post-pandemic economic recovery was weaker than expected, the real estate crisis persisted, consumption remained sluggish; the US maintained high interest rates, with the dollar index between 100 and 104, putting pressure on RMB.

2024: Alternating Fluctuations

A weakening dollar eased RMB pressure, and China’s fiscal stimulus boosted market confidence. USD/RMB volatility increased throughout the year, with offshore RMB breaking through 7.10 in August, reaching a six-month high.

Offshore RMB (CNH) vs Onshore RMB (CNY): Different Market Performances

Since CNH trades in international markets like Hong Kong and Singapore, with freer trading and unrestricted capital flows, it reflects global market sentiment; whereas CNY is subject to capital controls, with the People’s Bank guiding the exchange rate through daily midpoint rates and forex interventions. Therefore, CNH tends to be more volatile.

In 2025, despite multiple fluctuations, offshore RMB against USD showed an overall oscillating upward trend. Early in the year, impacted by US tariff policies and the dollar index soaring to 109.85, CNH depreciated past 7.36. The PBOC then took measures such as issuing 60 billion yuan in offshore bills to absorb liquidity and strict control of the midpoint rate.

Recently, with easing US-China trade dialogue, China’s stabilizing growth policies gradually taking effect, and Fed rate cut expectations rising, CNH has strengthened significantly. On December 15, CNH broke through 7.05 against the dollar, rebounding over 4% from the early-year high, hitting a 13-month high.

Conclusion: The Best Strategy for Converting RMB to USD

In summary, as China enters a sustained easing monetary cycle, the USD/RMB trend is becoming more clearly defined. Historical cycles driven by policy can last up to ten years, with short- and medium-term performance influenced by USD movements and other events.

For investors assessing whether converting RMB to USD is worthwhile, consider these key points:

1. Grasp the cycle rhythm — The current RMB appreciation cycle has started, but gains are limited; don’t expect short-term rapid surges.
2. Monitor three major variables — US dollar index, RMB midpoint rate, China’s economic policies; any change could reverse the trend.
3. Use phased entry — Instead of full position at once, build positions gradually to reduce timing risk.
4. Understand policy signals — The People’s Bank of China and Fed’s policy directions often lead market movements.

Ultimately, the forex market is driven mainly by macro factors. Data from various countries is transparent and publicly available. With large trading volumes and two-way trading, it’s a relatively fair and advantageous investment field for individual investors. As long as you grasp the core factors influencing RMB trends, you can greatly improve your chances of profitable investment.