How will the USD to RMB exchange rate move in 2026? Is it still a good time to invest now?

Since 2025, the USD/CNY exchange rate has exhibited a clear two-way fluctuation pattern. The onshore USD to CNY exchange rate has oscillated between 7.1 and 7.3, appreciating by 2.40% over the year; the offshore market has fluctuated between 7.1 and 7.4, with a 2.80% appreciation. In November, driven by easing US-China trade relations and expectations of Federal Reserve rate cuts, the RMB against the USD appreciated significantly, briefly reaching 7.0765, hitting a nearly one-year high.

Historical Review: RMB 5-Year Exchange Rate Trajectory

To understand the current USD/CNY exchange rate trend, it is essential to review the past five years’ evolution.

2020-2021 was a period of RMB strength. During the early pandemic, the RMB depreciated to 7.18 briefly, but as China led the pandemic control and economic recovery accelerated, coupled with the Fed’s near-zero easing policy, the RMB rebounded strongly to 6.50, appreciating over 6% for the year. This momentum continued into 2021, with USD to RMB fluctuating narrowly between 6.35 and 6.58, maintaining relative strength.

2022 marked a critical turning point. Aggressive Fed rate hikes pushed the US dollar index higher, with USD to RMB soaring above 7.25 from 6.35, marking an approximate 8% decline in the RMB in recent years. Meanwhile, China’s economic growth slowed, and a real estate crisis intensified, leading to low market confidence.

2023-2024 saw RMB hovering under pressure. In 2023, USD to RMB fluctuated between 6.83 and 7.35, ending the year around 7.1. In 2024, a weakening dollar eased pressure, and China introduced fiscal stimulus measures, increasing RMB volatility, with broad swings throughout the year.

Is it profitable to invest in RMB-related currency pairs now?

Answer: Yes, but it depends on timing and strategy.

Currently, the RMB is expected to remain relatively strong, exhibiting a pattern of inverse movement to the dollar within a limited range. The rapid appreciation below 7.0 by year-end is less likely, so investors should prepare for medium-term holding.

Focus on three major variables: the trend of the US dollar index, policy signals from the RMB midpoint rate, and the implementation strength of China’s stabilizing growth policies. Mastering these factors can significantly improve profit prospects.

Many international investment banks are optimistic about RMB appreciation

Regarding the USD/CNY exchange rate outlook from late 2025 to 2026, the market generally believes RMB may be at a cyclical turning point. The depreciation cycle that began in 2022 may have ended, and RMB could enter a new phase of medium- to long-term appreciation.

Major international banks’ forecasts are generally optimistic:

Deutsche Bank analysts indicate that RMB is entering a long-term appreciation cycle, estimating USD to RMB will rise to 7.0 by the end of 2025 and further to 6.7 by the end of 2026.

Morgan Stanley also expects moderate RMB appreciation, believing the dollar will continue to weaken over the next two years. The firm predicts that by 2026, the dollar index may fall back to 89, with USD to RMB exchange rate reaching around 7.05.

Goldman Sachs boldly predicts that the “breaking 7” point for RMB may arrive sooner than market expects. Goldman Sachs notes that the current real effective exchange rate of RMB is undervalued by 12% relative to the ten-year average. Based on progress in US-China trade negotiations and the current undervaluation, it expects RMB to USD to rise to 7.0 within the next 12 months. Goldman Sachs also states 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 devalue the currency.

Three key factors support RMB appreciation:

• Sustained resilience in China’s export growth
• The gradual reallocation of foreign capital into RMB assets
• The structurally weak US dollar index

Key factors influencing USD/CNY exchange rate trends

US Dollar Index Trend

In the first five months of 2025, the US dollar index declined by 9%, marking the worst start to a year in history. With the Fed’s rate cut cycle imminent, the dollar may further depreciate over the next 12 months. This suggests that Asian currencies, including RMB, could continue to appreciate.

US-China Relations and Trade Policies

Although signs of easing in US-China negotiations have appeared, the durability of peace remains uncertain. If future negotiations further ease tariffs, RMB could gain more support; if tensions escalate, RMB depreciation pressure will persist.

Federal Reserve Policy Movements

The Fed’s monetary policy is crucial for USD trends. In late 2024, the Fed signaled rate cuts, but the magnitude and pace in 2025 will depend on inflation data, employment market performance, and government policies. If inflation remains above target, the dollar may continue to strengthen; if economic slowdown occurs, accelerated rate cuts will weaken the dollar.

People’s Bank of China Policy Orientation

China’s monetary policy tends to remain accommodative to support economic recovery. The PBOC may lower interest rates or reserve requirements to inject liquidity. However, if accommodative policies combined with stronger fiscal stimulus stabilize the economy, RMB will be significantly supported in the long term.

China’s Economic Fundamentals

China’s economic data directly impact RMB exchange rates. When China’s economy grows steadily or outperforms other emerging markets, it attracts sustained foreign investment, increasing demand for RMB and strengthening the currency; conversely, it depreciates when growth falters. Key data to monitor include: quarterly GDP growth, official and Caixin PMI, CPI, urban fixed asset investment, etc.

How to independently judge the future trend of RMB exchange rate?

Rather than giving fish, teach how to fish. Investors can analyze USD/CNY trends through the following aspects:

Step 1: Track the People’s Bank of China’s policy stance

Monetary policy easing or tightening directly affects money supply and thus exchange rates. When policies are accommodative (rate cuts or reserve ratio reductions), RMB tends to weaken; when policies tighten (rate hikes or reserve ratio increases), liquidity tightens and RMB tends to strengthen.

Step 2: Focus on Chinese economic data

GDP growth, PMI, CPI, fixed asset investment are vital indicators of economic vitality. Improving economy attracts foreign capital inflows, increasing RMB demand; weakening economy may lead to capital outflows.

Step 3: Observe USD index movements

USD index trends directly influence USD/CNY. Fed policies, Eurozone economic performance, and global risk appetite all impact the dollar index. They usually have an inverse relationship.

Step 4: Study official exchange rate policy signals

Since 2017, the RMB midpoint rate has incorporated a “counter-cyclical factor,” enhancing the guidance role of official rates. While short-term effects are evident, the medium- to long-term trend still depends on the overall market direction.

Various ways to invest in RMB

Bank channels: Investors can open foreign exchange accounts at local or international banks for FX trading and investment.

Foreign exchange trading: Use legitimate online FX brokers to trade USD/CNY. Many platforms support two-way trading (long and short), allowing profit from both rising and falling prices.

Leverage trading: Most platforms support leveraged trading, enabling larger market exposure than the invested capital. However, leverage amplifies risks; proper risk management is essential.

Securities firms: Some securities companies offer FX trading services, allowing trading on designated platforms.

Futures trading: Participating in FX futures through futures exchanges is another way to engage in USD/CNY market.

Summary

As China enters a sustained easing cycle of monetary policy, the USD/CNY exchange rate shows a clear medium-term appreciation trend. Based on historical experience, such policy-driven cycles can last up to ten years, with short- and medium-term fluctuations caused by USD movements and external events, but the overall direction is gradually established.

By focusing on the four core factors—US dollar index, PBOC policies, US-China relations, and China’s economic fundamentals—investors can greatly improve their chances of profit in the FX market. The forex market’s large trading volume, fair two-way mechanism, and transparent information make it a relatively fair and advantageous investment choice for the general investor.