The RMB exchange rate returns to the "6" era, and the year-end foreign exchange settlement and sales surge pushes precious metals to a historic high

Offshore Real-Time Exchange Rate Reversal: USD and RMB Flip, PBOC Hints at Appreciation

At the end of the year, the foreign exchange market experiences a major turning point. The offshore RMB against the USD officially broke through the 7.0 level on December 25, reaching a high of 6.9960 intraday, the highest since September 2024. Onshore RMB, meanwhile, the USD against RMB fell to 7.0051, also hitting a low not seen since May 2023. This shift breaks the market’s long-standing bearish outlook on the RMB, with many traders indicating that strong demand for foreign exchange settlement and sales has become a certainty.

Key factors supporting the RMB’s appreciation include: sustained end-of-year settlement and sales demand, external dollar lack of rebound momentum, and subtle changes in PBOC policy signals. Goldman Sachs’s latest analysis points out that over the past few months, the People’s Bank of China (PBOC) has alternated between describing the exchange rate as “resilient” and “flexible,” suggesting the central bank may lean toward strengthening the RMB but also aims to avoid too rapid an appreciation.

According to Goldman Sachs’s tracking, during the period when the PBOC emphasized “enhancing exchange rate resilience” in September, the RMB appreciated faster against the USD, with a significant rise in settlement and sales rates by exporters; by November, the monetary policy report shifted to emphasize “maintaining exchange rate flexibility,” showing tolerance for further RMB appreciation. In December, the minutes of the Q4 Monetary Policy Committee meeting again emphasized resilience, indicating the PBOC intends to slow the appreciation pace.

Goldman Sachs forecasts that USD/RMB will reach 6.95, 6.90, and 6.85 respectively after 3, 6, and 12 months. It also expects the PBOC to cut reserve requirements by 50 basis points and lower interest rates by 10 basis points in Q1, with another 10 basis point rate cut in Q3.

Gold and Silver Hit New Highs Together, Precious Metals Market Remains Hot

In the commodities market, precious metals performed strongly. On December 26, gold briefly broke through the $4,500 level, reaching a high of $4,504; silver surpassed $73, rising to $73.67, setting a new record high. This reflects the transmission effect of a weakening dollar and ongoing concerns among global investors about inflation and geopolitical risks.

Bank of America’s outlook for the US bond market in 2026 predicts that the 10-year US Treasury yield will fall back to the 4% to 4.25% range by year-end, with the possibility of further declines. This outlook directly supports the upward potential of precious metals.

Bank of Japan Maintains Tight Monetary Policy, Budget Control Shows Initial Results

Bank of Japan Governor Ueda Kazuo recently stated that Japan’s core inflation is gradually accelerating and approaching the 2% target, and the central bank is prepared to continue raising interest rates. He pointed out that structural tightness in the labor market will persist, with companies beginning to pass on rising labor and raw material costs in food and other goods and services. Japan is forming a mechanism where wages and inflation rise in tandem. Given that real interest rates remain very low, if the baseline scenario materializes, the BOJ will continue to raise rates based on economic and price improvements.

Prime Minister Suga Satoshi announced that the total budget for the fiscal year starting April 2026 will be approximately 122.3 trillion yen, an increase of 6.3% from this fiscal year, setting a new record high for initial budgets. However, new government bond issuance will be limited to 29.6 trillion yen, the second consecutive year below 30 trillion yen, with debt dependence dropping from 24.9% to 24.2%, the first time below 30% in 27 years. Following this news, the yield on Japan’s 40-year government bonds fell 7 basis points to 3.62%, the lowest since November 17.

Global Semiconductor Sales Poised for Growth, Leading Companies Under Spotlight

Bank of America semiconductor analyst Vivek Arya states that AI development remains in the middle of a decade-long structural transformation, with the overall industry trend still upward, led by companies with clear competitive advantages. He predicts global semiconductor sales could grow 30% by 2026, reaching a milestone of over $1 trillion in annual sales for the first time. He favors companies like NVIDIA, Broadcom, Lam Research, KLA, AMD, and Cadence Design Systems, considering their high-margin structures and solid market positions as core investment targets.

CFRA Chief Investment Strategist Sam Stovall notes that for the US stock market to achieve double-digit gains again, all engines need to run at full speed. He estimates the S&P 500 target for the end of 2026 at 7,400 points, about 7% higher than current levels, implying that while the market may rise next year, increasing headwinds could make it difficult to replicate the strong performance of 2024.

Chip Industry Sees Authorization Consolidation, Groq Technology Integrates into NVIDIA Ecosystem

NVIDIA has reached an licensing agreement with AI chip startup Groq, granting permission to use Groq’s chip technology, and will hire Groq’s current CEO Simon Edwards. Groq will continue to operate as an independent company, with its cloud business ongoing, and founders Jonathan Ross, President Sunny Madra, and other engineering team members joining NVIDIA.

Groq completed a $750 million funding round in September, with a valuation of $6.9 billion, more than doubling from $2.8 billion in August last year. Focused on the “inference” domain, Groq fills a gap in NVIDIA’s response phase of trained AI models. This partnership marks accelerated industry consolidation and a more comprehensive layout by leading companies.

Global Trading Activity Slows Due to Holidays; Next Week’s Trading Focus

Affected by Christmas holidays, activity in major global markets has significantly declined. US markets were closed all day on December 25, reopening on December 26; Hong Kong markets were closed on December 25-26; London, Frankfurt, and Paris exchanges were closed on December 25 and remained closed on December 26 for Boxing Day; Australian, Singapore, and other Asia-Pacific markets also closed according to local customs. Investors should pay attention to real-time exchange rates, key indicators like USD/RMB, and the price discovery process as global markets resume trading.