## The Rise of the Renminbi: Is There Still Room for Growth in 2026?

The recent performance of the Renminbi against the US dollar has been impressive. On December 25th, the offshore Renminbi to USD exchange rate hit a new low since September 2024, with the cost of converting USD to RMB falling below the 7.00 psychological threshold. Onshore RMB also refreshed lows since May 2023 on the same day, and the market generally expects the RMB appreciation trend to continue.

This round of RMB strengthening is driven by three core factors. First is the overall weakening of the US dollar. Under the Federal Reserve's rate cut cycle and the global de-dollarization wave, the US dollar index has fallen over 10% this year, with a decline of more than 2% in the past month. Second is policy guidance. The People's Bank of China (PBOC) has continuously increased the midpoint of the RMB exchange rate, signaling support for RMB appreciation. Third is seasonal factors. Year-end corporate foreign exchange settlement demands are concentrated, and the trade surplus accumulated in China in 2025 plays an important role at this time.

From a more detailed perspective, the PBOC's decision not to further cut interest rates, combined with the holiday effect of tight offshore liquidity, has also indirectly boosted the RMB. Some analysts point out that the continued appreciation of the RMB will enhance China's capital market attractiveness to international investors, which will have a long-term impact on subsequent cross-border investment flows.

**What is the outlook for the exchange rate in 2026?**

Although the RMB has already reached a new high, from multiple dimensions, there is still room for appreciation. Based on trade-weighted and inflation factors, many professional institutions believe that the current USD to RMB exchange rate is still undervalued.

International investment banks have an optimistic consensus for 2026. ANZ Bank expects the rate to remain in the 6.95-7.00 range in the first half of the year; Goldman Sachs is more bullish on the RMB, predicting a mid-term decline to 6.90, and further down to 6.85 by the end of the year; Bank of America believes that as US-China tensions ease and exporters sell more USD, the rate could drop to 6.80 by year-end.

It is worth noting that these institutions share the assumption of continued changes in exporter behavior. When the RMB appreciates, exporters are motivated to accelerate foreign exchange settlement, which in turn reinforces the RMB appreciation expectation—forming a self-reinforcing positive feedback loop. Additionally, the scale of China's trade surplus and export competitiveness, along with its position in the global economic structure, will continue to support the RMB's medium- to long-term appreciation trend.