Will the RMB still appreciate in 2026? Multiple institutions provide their answers

Recently, the trend of the RMB against the US dollar has attracted widespread market attention. On December 25, the offshore USD/RMB exchange rate fell to 6.9965, and the onshore USD/RMB fell to 7.0051, both hitting recent lows. What signals are behind these results?

## The Triple Drivers of RMB Appreciation

The current strength of the RMB is not accidental but the result of multiple factors stacking up. First, the US dollar itself is weakening. This year, influenced by expectations of Federal Reserve rate cuts and the global de-dollarization wave, the US dollar index has fallen by over 10% cumulatively, with a decline of more than 2% in the past month alone. Against this backdrop, the RMB appears relatively stronger.

Second, the central bank’s policy orientation is clear. Data shows that the central bank has continuously raised the midpoint of the RMB exchange rate this year, which is effectively sending a clear signal to the market: RMB appreciation aligns with policy intentions. This "gentle guidance" approach gives market participants more confidence to bet on RMB appreciation.

The third driver is the year-end foreign exchange settlement wave. In 2025, China accumulated a substantial trade surplus. As the year-end approaches, enterprises are converting foreign exchange into RMB to complete annual settlements. This seasonal demand, combined with other factors, creates sustained buying pressure on the RMB. Wang Qing, Chief Macro Analyst at Orient Securities, pointed out that "weak US dollar and seasonal foreign exchange conversions by exporters have driven RMB strength."

## Will the RMB Still Have Room to Appreciate in 2026?

According to analyses from multiple institutions, the likelihood of continued RMB appreciation in 2026 is relatively high, but the gains may be moderate.

Xing Zhaopeng, Senior Strategist at ANZ Bank, believes that in the first half of 2026, USD/RMB may stay within the 6.95-7.00 range, indicating strong market support for the RMB. Goldman Sachs is more optimistic about the RMB outlook, stating that the RMB is seriously undervalued relative to economic fundamentals, with about 25% upside potential. Goldman Sachs expects USD/RMB to fall to 6.90 by mid-2026 and further to 6.85 by the end of the year. Bank of America’s view is the most bullish, believing that easing US-China tensions will expand exporters’ dollar selling, with USD/RMB expected to fall to 6.80 by year-end.

It is worth noting that, based on trade-weighted exchange rates and China’s inflation situation, the RMB still appears undervalued. This means that, from both fundamental and market sentiment perspectives, the RMB has solid support for future appreciation.

## What Does This Mean for Investors?

The continuous appreciation of the RMB helps enhance China’s capital market attractiveness to foreign investors. When expectations of RMB appreciation are stable, foreign capital converting USD into RMB to buy Chinese assets will be more motivated. This could positively influence cross-border capital flows in A-shares and Hong Kong stocks.

At the same time, ongoing RMB appreciation will also impact foreign trade companies and multinational corporations in terms of exchange rate risk management, requiring proactive hedging strategies. Overall, the trend of RMB appreciation in 2026 has already taken shape, and investors should closely monitor exchange rate movements and their impact on asset allocation.