Will the Chinese Yuan appreciate or depreciate in 2026? Understand the trend of the USD to RMB exchange rate in this article

The trend of the RMB exchange rate in 2025 can be called a “roller coaster”. After three consecutive years of depreciation from 2022 to 2024, the RMB has finally rebounded this year. The US dollar appreciated by 2.40% against the RMB throughout the year, and the offshore market rose by as much as 2.80%. After entering November, the RMB appreciated below 7.08 against the US dollar, and even touched 7.0765, a new high in nearly a year.

What’s behind this round of rebound? More importantly,Will the US dollar against the RMB exchange rate continue to strengthen in 2026? Can you make money buying RMB now?

RMB Historical Exchange Rate: A Review of Five-Year Trends

To judge the future, look at the past first. The trend of the US dollar against the RMB in the past five years has gone through three obvious stages:

2020-2021: Appreciation during the epidemic

In the early days of the epidemic, the Federal Reserve cut interest rates to nearly zero, while the People’s Bank of China maintained a prudent policy, and the widening of interest rate spreads was good for the yuan. With China taking the lead in controlling the epidemic and the rapid economic recovery, the renminbi rose from 7.0 at the beginning of the year to 6.50 at the end of the year, appreciating by about 6% for the whole year. Entering 2021, China’s exports continued to be strong and the economy improved, with the RMB fluctuating in a narrow range of 6.35-6.58, maintaining relative strength.

2022: A wave of depreciation caused by the Fed’s interest rate hikes

This year was a turning point. The Federal Reserve raised interest rates aggressively and the US dollar index soared, and the US dollar soared from 6.35 to more than 7.25 against the RMB, depreciating by 8% for the year, the largest decline in recent years. During the same period, China’s strict epidemic prevention policies dragged down the economy, the real estate crisis intensified, and market confidence was low.

2023-2024: The US dollar weakens, the yuan is under pressure

In 2023, the US dollar will fluctuate between 6.83 and 7.35 against the RMB, with an annual average of around 7.0. Although high interest rates in the United States have been maintained, the economic recovery has fallen short of expectations and the real estate downturn continues to drag down the RMB. The situation began to improve in 2024, with a weakening dollar and China’s fiscal stimulus boosting confidence, and the yuan gradually rebounding.

RMB exchange rate forecast for 2026: three supporting factors

At present, the market generally believes thatThe depreciation cycle that began in 2022 is coming to an end, and the RMB is expected to enter a medium- and long-term appreciation track。 A number of international investment banks are optimistic about the prospects of the RMB:

Deutsche BankThe US dollar against the RMB exchange rate is expected to rise to 7.0 by the end of 2025 and further to 6.7 by the end of 2026, suggesting that there is considerable room for the RMB to appreciate.

Morgan StanleyIt is expected that by the end of 2026, the US dollar index may fall back to 89, and the corresponding US dollar against the RMB exchange rate is expected to reach about 7.05.

Goldman SachsThe research report released in May this year attracted the attention of the industry. The bank pointed out that the current real effective exchange rate of the RMB is 12% undervalued from the 10-year average, of which the underestimation of the US dollar is as high as 15%. Based on the undervaluation of the RMB exchange rate and the progress of Sino-US trade negotiations, Goldman Sachs expects the US dollar to rise to 7.0 against the RMB in the next 12 months.

The three core factors supporting RMB appreciation are:

1. China’s exports continue to be resilient: Economic data shows strong export performance, providing strong support for the yuan
2. Foreign capital reallocates RMB assets: International investors are gradually returning, increasing the demand for RMB
3. The US dollar index is structurally weak: The US dollar index fell 9% in the first five months of 2025, and the US dollar may depreciate further in the next 12 months

Key variables affecting the US dollar against the yuan

The real driving force for the future trend of the RMB comes from four aspects:

Fed policyis the primary factor. The Fed has signaled interest rate cuts, but the magnitude and pace of rate cuts in 2025 depend on inflation trends and employment data. If inflation remains high, the Fed may slow down the pace of interest rate cuts, supporting the strength of the dollar; If the economy slows down significantly, the acceleration of interest rate cuts will weaken the dollar and benefit the yuan.

US-China trade relationsDirectly affects market sentiment. While progress has been made in trade negotiations, long-term stability remains uncertain. If the tariff conflict eases, the RMB will be supported; If the situation escalates, the pressure on RMB depreciation will continue.

People’s Bank of China’s policy orientationIt’s also critical. The central bank tends to ease policy to support economic recovery, and interest rate cuts or RRR cuts will put short-term depreciation pressure on the yuan. However, if loose monetary policy is combined with fiscal stimulus to stabilize the economy, it will boost the yuan in the long run.

Progress in RMB internationalizationIt plays a supporting role in the medium and long term. The increased use of the renminbi in global trade settlements, as well as currency swap agreements between central banks and other countries, will support the stability of the renminbi in the long term.

How to judge the trend of RMB? A must-read guide for investors

Instead of waiting passively, take the initiative. Investors can predict the trend of the RMB through the following key indicators:

1. Pay attention to the policy signals of the People’s Bank of China

The tightening of monetary policy directly affects the supply and demand of RMB. Easing policies (interest rate cuts/RRR cuts) will increase the supply of RMB and push down the exchange rate; Tightening policy (rate hikes/reserve hikes) tightens liquidity and pushes up exchange rates. Taking 2014 as an example, the central bank started an easing cycle and continuously cut the reserve requirement ratio, and the US dollar gradually rose from 6.0 to 7.4 against the RMB, which shows its deep impact.

2. Track China’s economic data

GDP, PMI, CPI, fixed asset investment and other data reflect the hot and cold of the economy. When China’s economy outperforms other emerging markets, foreign capital inflows continue, pushing up demand for the yuan. If it is the other way around, it will be the opposite.

3. Closely monitor the trend of the US dollar index

The trend of the US dollar is closely related to the Fed’s policy and global capital flows. When the US dollar is strong, the RMB is under pressure, and when the US dollar is weak, the RMB benefits. In 2017, the European economic recovery was strong, the European Central Bank released a signal of tightening, the US dollar index fell by 15% for the year, and the US dollar also fell against the yuan.

4. Understand the guiding role of the central parity of the RMB

Unlike free-floating currencies, the central parity of the RMB exchange rate has added a “countercyclical factor” since 2017, enhancing official guidance. The short-term impact on the exchange rate is obvious, but the medium- and long-term trend is still dominated by the general direction of the market.

Is it profitable to invest in RMB-related currency pairs at this stage?

The answer is yes, but the key is to seize the moment.

At present, it is predicted that the RMB will maintain a strong trend in the short term, showing a range-bound fluctuation pattern with a limited range of fluctuations and inverse fluctuations with the US dollar. The possibility of rapid appreciation below 7.0 by the end of 2025 is low, but the long-term trend is positive.

For investors, the main ways to participate in USD-CNY trading include: opening a foreign exchange account through a bank, cooperating with a foreign exchange broker, providing foreign exchange services through securities companies, or conducting foreign exchange futures trading on futures exchanges. Many platforms support two-way trading, which means that not only can you make a profit when you go up, but also if you make the right judgment, you can also make a profit when you fall. At the same time, leverage tools can amplify returns, but the risks are also magnified, which requires rational setting.

Summary

As the People’s Bank of China enters a sustained easing cycle, the US dollar has shown a clear trend against the RMB. According to historical experience, the policy cycle effect can last for ten years, during which there will be short- and medium-term fluctuations due to fluctuations in the US dollar, geopolitics and other factors, but the general direction remains unchanged.

Investors only need to grasp the above core influencing factors - central bank policies, economic data, Fed trends, and Sino-US relations - to significantly increase the probability of profit. The foreign exchange market involves macro factors, open and transparent data, huge trading volume, and supports two-way trading, which is relatively fair to ordinary investors and has many opportunities.

The key is not to miss this turning point in this round of dollar-to-yuan exchange.