RMB Exchange Rate Trend Forecast 2026: What Is the Next Step After Breaking Through 7.0?

The Chinese Renminbi successfully broke the 7.0 mark by the end of 2025 and is currently stable around 6.9. Driven by China’s resilient foreign trade and the reallocation of offshore RMB assets by foreign investors, the RMB exchange rate is forecasted to further strengthen, with multiple international investment banks expecting a test of the 6.70 to 6.85 range in 2026. This turning point suggests that the depreciation cycle starting in 2022 may have ended, and the RMB could enter a new medium- to long-term appreciation trajectory.

RMB Ends Three Years of Depreciation and Enters a New Appreciation Cycle

2025 was a pivotal year for the RMB. Throughout the year, USD/RMB fluctuated within a broad range of 6.95 to 7.35, appreciating about 4%, completely reversing the three-year depreciation trend from 2022 to 2024.

In mid-December 2025, buoyed by Fed rate cuts and improved market sentiment, the RMB surged past the 7.05 level. By December 30, this rally was further solidified, with the exchange rate breaking the psychological 7.0 barrier and eventually reaching around 6.9623.

The logic behind this shift warrants attention. In the first half of the year, global tariff uncertainties and a strengthening US dollar index pushed offshore RMB exchange rates below 7.40, hitting a new low since the 2015 “8.11” reform. Market expectations of RMB depreciation peaked.

However, in the second half, progress in China-US trade negotiations and signs of easing tensions emerged. Coupled with a weakening dollar index, the RMB gradually stabilized and began a gentle appreciation. Against the backdrop of rising major non-dollar currencies like the euro and pound, the RMB against the dollar also rebounded, stabilizing market sentiment.

Four Major Drivers Will Shape Future RMB Exchange Rate Trends

To accurately forecast RMB exchange rate movements, it’s essential to understand the core forces driving currency fluctuations. These factors can be categorized into external environment and internal policy.

USD Index Trends: Challenges and Opportunities

In 2025, the USD index experienced significant volatility. It declined from around 109 at the start of the year to about 98 in the first half—a nearly 10% drop, marking the weakest first half since the 1970s. In November, as market expectations of Fed rate cuts cooled and US economic data beat expectations, the dollar rebounded, repeatedly surpassing 100.

While a moderate strengthening of the dollar typically pressures the RMB, positive developments from US-China relations temporarily offset short-term dollar gains. As of January 2026, with the Fed beginning a new easing cycle, the dollar index has retreated to 98.8–98.2. The global de-dollarization trend and the dovish stance of the Fed have effectively dampened the dollar’s short-term rebound momentum, providing a favorable external environment for the RMB to maintain its “6 era.”

US-China Trade Negotiations: Fragile Balance

Recent talks in Kuala Lumpur have shown positive signals. 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 sides also agreed to delay restrictions on rare earth exports, port fees, and expand purchases of US soybeans and agricultural products.

However, this fragile balance remains vulnerable. Whether the substantive improvement in US-China trade relations can continue into late 2026 is the key external uncertainty in USD/RMB forecasts. If the status quo persists, the RMB is likely to remain stable; if tensions escalate again, the market could face renewed pressure, possibly turning the RMB weaker.

Federal Reserve Policies: Deep Impact of Interest Rate Trajectory

The Fed’s monetary policy is crucial for the dollar’s trend. Market expectations suggest 2–3 rate cuts in 2026. Despite some fluctuations in inflation data, the Fed’s focus has shifted to preventing a hard landing as the labor market stabilizes. This preemptive easing reduces US Treasury yields, easing yield differentials, and encourages capital inflows into emerging markets, supporting the RMB.

China’s Policy Environment: The Race Between Easing and Recovery

China’s monetary policy leans toward easing to support economic recovery, especially amid sluggish real estate and weak domestic demand. The People’s Bank may cut interest rates or reserve requirements, which typically puts downward pressure on the RMB. However, if easing is coupled with stronger fiscal stimulus leading to economic stabilization, the RMB could benefit long-term. Additionally, the internationalization of the RMB (increased use in trade settlement, expanded currency swap agreements) will support stability over time, though short-term dominance of the US dollar as a reserve currency remains difficult to challenge.

How Do International Banks View the RMB Outlook for 2026?

The market generally sees the RMB at a cyclical turning point. The depreciation cycle that began in 2022 may be over, and the RMB could enter a new medium- to long-term appreciation phase.

Looking ahead to 2026, three main factors are expected to support RMB strength: first, China’s resilient export growth; second, the gradual reallocation of foreign assets into RMB; third, a structurally weaker dollar index.

Many international investment 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, with a forecast of around 6.7 in 2026. Goldman Sachs is bullish, targeting an exchange rate of 6.85 in 2026 supported by policy measures.

How Do Historical Data Guide Current Investment Decisions?

Understanding the recent five-year trend provides valuable reference points.

2020: Rebound Amid Pandemic

USD/RMB fluctuated between 6.9 and 7.0 early in the year. Amid US-China trade tensions and COVID-19, RMB depreciated to 7.18 in May. But as China quickly controlled the pandemic and economic recovery outpaced expectations, coupled with Fed rate cuts to near zero, the RMB strengthened, ending the year around 6.50, appreciating about 6% for the year.

2021: Export Boom

Strong exports and economic growth kept USD/RMB within 6.35–6.58, averaging about 6.45, maintaining relative strength.

2022: Impact of Aggressive Fed Rate Hikes

USD/RMB rose from 6.35 to over 7.25, depreciating roughly 8%, the largest decline in recent years. The Fed’s aggressive hikes boosted the dollar index, while China’s strict COVID policies and property sector crisis weighed heavily on the economy and market confidence.

2023: Continued Structural Challenges

USD/RMB fluctuated between 6.83 and 7.35, averaging around 7.0, ending near 7.1. Sluggish post-pandemic recovery, ongoing property debt issues, and high US rates kept the RMB under pressure, with the dollar index between 100 and 104.

2024: Turning Point in Volatility

A weakening dollar eased RMB pressure. China’s fiscal stimulus and property measures boosted confidence. USD/RMB moved from 7.1 to about 7.3 mid-year, with offshore RMB breaking below 7.10 in August, reaching a six-month high. Increased volatility signals an approaching turning point.

Practical Framework for RMB Exchange Rate Investment

Rather than passively waiting for market swings, investors should actively analyze key factors. The following four dimensions form a comprehensive framework:

1. Central Bank Monetary Policy Signals

The People’s Bank of China’s policy stance directly influences liquidity and the RMB. Easing (rate cuts, reserve requirement reductions) tends to increase supply and weaken the RMB; tightening (rate hikes, reserve increases) supports RMB strength.

In November 2014, PBOC launched a easing cycle, cutting loan rates six times and lowering reserve ratios from 18% to below 8%, leading USD/RMB from 6 to nearly 7.4, illustrating the policy’s impact.

2. China’s Economic Fundamentals

Stable or outperforming economic growth attracts foreign investment, strengthening the RMB. Key indicators include GDP (quarterly), PMI (monthly, manufacturing and services), CPI (inflation), and fixed asset investment.

3. USD Index and Fed Policy

USD trends are directly linked to USD/RMB. The Fed’s rate decisions and the dollar’s strength influence the exchange rate. For example, in early 2017, strong Eurozone recovery and signals of future tightening caused the dollar to weaken, with USD index dropping 15%, and USD/RMB following suit.

4. Official Exchange Rate Guidance

Since 1978, China has managed its exchange rate through reforms. In May 2017, the RMB’s central parity calculation was adjusted to include an inverse cycle factor, strengthening official guidance. While this influences short-term movements, long-term trends depend on market fundamentals.

Key Observations for RMB Investment in 2026

In the short term, the RMB is expected to remain volatile but generally strong, anchored around the 6.9 level with solid support below 7.0. Since it has stabilized below 7.0, a quick drop below 7.1 is less likely, and the market is searching for a new equilibrium between 6.90 and 7.00.

Investors should monitor three key variables:

1. How much further can the USD index decline?

The extent of Fed rate cuts in 2026 will determine the dollar’s weakness and the RMB’s upside potential. A sustained easing cycle could push RMB higher.

2. Regulatory signals at the 6.9 level

Official interventions via the central parity or other tools may prevent rapid appreciation, influencing short-term volatility and direction.

3. Effectiveness of China’s growth stabilization policies

The actual impact of policies aimed at boosting domestic demand and the stock market will set the long-term bottom for the RMB. If growth underperforms, downward pressure may intensify.

Summary: Core Logic for RMB Exchange Rate Forecasting

As China continues its easing cycle, USD/CNH shows clear trend tendencies. Historical cycles driven by policy can last up to a decade, with short-term fluctuations influenced by dollar movements and other events.

By focusing on four key factors—central bank policies, economic fundamentals, dollar trends, and official guidance—investors can significantly improve the accuracy of RMB exchange rate forecasts and enhance profit opportunities. The FX market is primarily macro-driven, with transparent data releases and large trading volumes, making it a relatively fair and accessible investment environment.

Currently, the RMB is in the early stage of an appreciation cycle. For forward-looking investors, this is an excellent window to understand macro trends and seize exchange rate opportunities. Mastering these four dimensions will help navigate the uncertainties in RMB exchange rate predictions.