Renminbi appreciation new phase: from US dollar strengthening to multi-currency opportunities, the exchange rate may reach 6.85 by 2026

The process of RMB internationalization is accelerating. In recent weeks, the RMB’s appreciation against the US dollar has been particularly strong, reflecting not only the Federal Reserve’s rate cut cycle but also revealing China’s strategic signal to proactively enhance the international status of the RMB.

The appreciation momentum hits new highs, breaking through multiple key levels

As of the end of November, the RMB’s appreciation has been significant. The CFETS RMB Exchange Rate Index rose to 98.22 on November 21, reaching its highest level since April this year. Specifically, the onshore USD/RMB fell to 7.0824, and the offshore USD/RMB fell to 7.0779, both breaking lows not seen in over a year.

This wave of appreciation is not a flash in the pan. Over the past few months, the People’s Bank of China has maintained daily adjustments to the midpoint rate to guide the exchange rate steadily higher; state-owned banks have frequently entered the market to buy US dollars, effectively suppressing sharp fluctuations in the exchange rate. The cooperation of these forces has promoted orderly RMB appreciation.

The driving forces come from two aspects: external rate cuts + internal proactive measures

The reasons for the accelerated RMB appreciation are not complicated. First, the Federal Reserve is gradually entering a rate cut cycle, weakening the US dollar, which provides external conditions for RMB appreciation. Second, and more importantly, Chinese authorities are actively promoting RMB internationalization.

Kelvin Lam, senior economist at Pantheon Macroeconomics, pointed out that from a long-term strategic perspective, China seems intent on building a stable and reliable international image for the RMB, similar to its approach during the 1998 Asian financial crisis, when the RMB refused to engage in competitive devaluation and consolidated its position as a regional central currency.

Why strengthen the international status of the RMB at this time?

Compared to the RMB’s 5% depreciation during the 2018 trade war, the RMB has appreciated nearly 3% by 2025, a stark contrast that illustrates a change in China’s policy orientation.

Kiyong Seong, Chief Asia Macro Strategist at Société Générale, said: “In the context of increasing global market volatility, demonstrating the resilience and stability of the RMB provides strong support for RMB internationalization.” Data from the Bank for International Settlements (BIS) confirms this—since 2022, the daily trading volume of USD/RMB has surged nearly 60%, reaching $781 billion, accounting for over 8% of global daily foreign exchange trading.

Goldman Sachs forecast: 7.0 by year-end, rising to 6.85 next year

From the perspective of market participants, RMB appreciation is highly significant. Goldman Sachs analysts expect the USD/RMB exchange rate to fall to the 7.0 level by the end of the year, and further appreciate to 6.85 in 2026.

Goldman Sachs believes that based on economic fundamentals and policy guidance, RMB internationalization has become China’s long-term policy focus, and it is expected to accelerate significantly in the coming years. This trend will not only impact the USD/RMB exchange rate but also have chain reactions on other currency pairs such as RMB/Australian dollar.

The deeper logic behind RMB appreciation is clear: a stable and appreciating RMB is the cornerstone of its internationalization.