Will the RMB continue to appreciate? Institutional forecasts for the USD to RMB exchange rate in 2026

Will the RMB Still Appreciate in 2026?

International investment banks have offered their perspectives. Goldman Sachs believes that, based on economic fundamentals, the RMB is significantly undervalued, with an undervaluation of up to 25%. The bank forecasts that the USD to RMB exchange rate will fall to 6.90 by mid-2026, and further decline to 6.85 by the end of the year. Bank of America’s outlook is more optimistic, predicting that by the end of 2026, the USD to RMB rate could drop to 6.80, citing easing US-China relations as a factor that will encourage Chinese exporters to increase their USD selling. ANZ Bank is relatively conservative, expecting the USD to RMB exchange rate to fluctuate within the 6.95-7.00 range in the first half of 2026.

Three Forces Behind the Recent RMB Appreciation

Why has the RMB recently broken through the psychological barrier of 7? Market analysis points to three main driving forces.

First is the weakening of the US dollar itself. The Federal Reserve has entered a rate-cutting cycle, and the global de-dollarization trend continues to deepen, leading to the US dollar index falling over 10% since the beginning of the year, with a decline of more than 2% in the past month alone. This broad dollar depreciation has directly boosted the relative value of the RMB.

Second is the Chinese central bank actively guiding the RMB to appreciate. By continuously adjusting the midpoint of the USD to RMB exchange rate (reference rate), the central bank is sending a clear policy signal, creating favorable conditions for RMB appreciation.

The third factor comes from the year-end foreign exchange settlement wave. In 2025, China accumulated a large trade surplus, and as the year-end approached, companies engaged in intensive foreign exchange settlement. This seasonal foreign exchange demand pushed the RMB to a stronger level.

Key Data Overview

On December 25, the USD to offshore RMB (USD/CNH) hit a low of 6.9965, the lowest since September 2024. During the same period, the USD to onshore RMB (USD/CNY) also fell to 7.0051, the lowest since May 2023. These figures reflect the strength of the RMB’s appreciation.

Market Interpretation of This Change

Wang Qing, Chief Macro Analyst at Dongfang Jincheng, pointed out that the combination of the US dollar’s weakness and seasonal foreign exchange needs of export companies has jointly driven the RMB’s strength. More importantly, RMB appreciation itself has a positive effect on China’s capital markets—when the RMB appreciates, the cost of converting USD to RMB decreases, which can boost international investors’ enthusiasm for participating in China’s stock market.

Additionally, the central bank’s delayed further rate cuts, along with liquidity tightening in the offshore market as the holiday approaches, have also contributed to the RMB’s upward movement to some extent.