RMB appreciation in progress: USD to RMB breaks 7, can it continue to rise in 2026?

Current Situation: Renminbi Experiences Strong Appreciation

In December, the RMB against the US dollar showed a strong performance. The USD/CNH (offshore RMB) has fallen to 6.9965, the lowest since September 2024; the USD/CNY (onshore RMB) also dropped to 7.0051, marking a record low since May 2023.

This round of appreciation is driven by three forces: first, the weakening of the US dollar itself; second, proactive guidance from the central bank; third, seasonal demand for foreign exchange by enterprises at year-end. Data shows that the Federal Reserve’s rate cuts and the global de-dollarization trend continue, with the US dollar index down over 10% this year and dropping more than 2% in the past month, exerting direct upward pressure on the RMB.

Central Bank’s Clear Stance: Guiding RMB to Gradually Appreciate

The actions of China’s central bank also send a clear signal. By continuously raising the midpoint rate of USD/CNY (reference rate), the central bank is effectively conveying a clear message to the market — allowing the RMB to appreciate. This guiding policy is more moderate than direct intervention but also more resolute.

Additionally, the central bank has not further cut interest rates, and factors such as liquidity tightness during the holiday season are indirectly supporting the RMB’s upward movement. Wang Qing, Chief Macro Analyst at Orient Securities, believes, “This round of appreciation will significantly enhance China’s capital market attractiveness to international investors” — meaning, if you are a stock market participant, RMB appreciation may bring indirect benefits.

What to Expect in 2026? Institutions Are Optimistic About the RMB

Here’s the interesting part. Despite the RMB breaking the 7 mark, many international institutions still believe the RMB is undervalued.

Goldman Sachs’s view is the most aggressive: they believe the RMB is undervalued by 25% relative to economic fundamentals. Based on this judgment, Goldman Sachs expects USD/CNY to fall to 6.90 by mid-2026, and possibly to 6.85 by the end of the year.

Bank of America also remains optimistic. They believe that as US-China relations ease, the scale of USD selling by Chinese exporters in 2026 will further expand, and by the end of 2026, USD/CNY could fall to 6.80.

A relatively conservative outlook comes from ANZ Bank, which predicts that in the first half of 2026, USD/CNY will fluctuate within the 6.95-7.00 range.

Underlying Logic: Trade Competitiveness and Economic Fundamentals

Why are so many institutions optimistic about RMB appreciation? The core reason is that China’s international trade competitiveness and economic fundamentals are seriously undervalued. From a trade-weighted perspective, the RMB’s actual purchasing power and international competitiveness still have significant room for growth.

Plus, China accumulated a huge trade surplus in 2025, and this appreciation momentum may continue into next year. As the RMB becomes more attractive, international capital’s interest in Chinese assets will also increase — creating a positive feedback loop.

Investment Insights

If the above logic holds, the RMB’s appreciation trend in 2026 is likely to continue. For investors holding USD, this means gradually reducing exchange costs; for those optimistic about Chinese assets, RMB appreciation will also boost overseas capital participation, helping to enhance overall market activity.

Currently, breaking the 7 mark is not the end but a new starting point for the RMB.