Can the RMB's appreciation trend continue until 2026? Several investment banks provide forecasts

Institutions Offer Divergent Views: What Will the USD to CNY Exchange Rate Look Like in 2026?

Regarding the future performance of the Renminbi, major investment banks have already made their bets. Goldman Sachs’s outlook is the most optimistic: by mid-2026, the USD to CNY will fall to 6.90, and by the end of the year, it will further depreciate to 6.85. Bank of America is even more bullish on the Renminbi, expecting the USD to CNY to possibly drop to 6.80 by the end of 2026. In contrast, ANZ Bank’s forecast is relatively conservative, suggesting that in the first half of 2026, the USD to CNY may fluctuate between 6.95 and 7.00.

These predictions reflect a consensus: there is still room for the Renminbi to appreciate. Goldman Sachs points out that, based on economic fundamentals, the Renminbi is undervalued by approximately 25%.

Breaking Through the 7-Level Barrier Recently: Three Major Drivers Boost the Renminbi

On December 25, the USD to offshore CNY (USD/CNH) dipped to 6.9965, hitting a new low since September 2024. On the same day, the USD to onshore CNY (USD/CNY) fell to 7.0051, approaching the psychological level of 7 for the first time since May 2023.

The factors driving the Renminbi’s appreciation can be summarized into three points. First is the weakness of the US dollar— the Federal Reserve has been cutting interest rates, coupled with an increasing trend of de-dollarization globally. The US Dollar Index has fallen over 10% this year, with a decline of more than 2% in the past month. Second, the People’s Bank of China (PBOC) actively guides the Renminbi to appreciate. Data shows that the central bank has continuously raised the midpoint rate of the Renminbi exchange rate throughout the year, sending a clear signal of support for the currency’s appreciation. Third is the year-end foreign exchange settlement effect. In 2025, China’s trade surplus was substantial, and in the fourth quarter, companies accelerated foreign exchange settlement, further boosting demand for the Renminbi.

Additionally, the PBOC’s delay in further interest rate cuts and the tightening of offshore liquidity at year-end have also supported the Renminbi.

What Does Renminbi Appreciation Mean for Capital Markets?

Wang Qing, Chief Macro Analyst at Dongfang Jincheng, believes that “the main drivers of the Renminbi’s strength are the US dollar’s weakness and seasonal foreign exchange conversions by exporters.” He further points out that the continued appreciation of the Renminbi has an important positive effect: it will enhance the attractiveness of China’s capital markets to foreign investors.

Fundamentally, although the USD to CNY exchange rate has already strengthened significantly, considering the trade-weighted exchange rate and China’s deflationary environment, the Renminbi still appears undervalued. This means there is still room for appreciation. Bank of America emphasizes that the easing of US-China relations has improved the export outlook for Chinese exporters, and the scale of enterprise USD foreign exchange settlement is expected to further expand in 2026, which will continue to support the Renminbi’s appreciation.