RMB against the US dollar surges to 6.85! The international ambitions behind the appreciation

Federal Reserve Rate Cuts + Policy Guidance Drive the Renminbi Exchange Rate to New Yearly Highs

Recently, the performance of the Renminbi has been quite strong. As of November 26, the USD onshore RMB (USD/CNY) fell to 7.0824, and the USD offshore RMB (USD/CNH) dropped to 7.0779, both hitting over a year’s low. Earlier, the CFETS Renminbi Exchange Rate Index surged to 98.22, reaching its highest level since April this year.

Behind this appreciation are the continuous rate cuts by the Federal Reserve and deliberate guidance from the People’s Bank of China. The daily midpoint setting by the PBOC has been adjusted upward within a fluctuating range, and state-owned banks have been actively buying USD to limit exchange rate volatility, allowing the RMB to steadily strengthen.

From Competitive Devaluation to Stable Appreciation: The Reversal of the Renminbi’s International Image

Interestingly, this appreciation reflects not only monetary policy adjustments but also China’s strategic considerations regarding the international status of the Renminbi.

Kelvin Lam, Senior Economist at Pantheon Macroeconomics, pointed out that from a long-term strategic perspective, China is intentionally demonstrating the stability of the Renminbi to build international credibility. This recalls the 1998 Asian financial crisis when the Renminbi firmly refused to follow the trend of devaluation, successfully establishing itself as a regional safe-haven currency.

In comparison, during the US-China trade friction in 2018, the Renminbi was forced to devalue by about 5%, but by 2025, it appreciated by nearly 3%. This shift is highly significant. Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that showing strength and stability amid current market volatility provides the best endorsement for the internationalization of the Renminbi.

Bank for International Settlements Data Shows Growing Transaction Volumes

Trade data also confirms this trend. According to BIS statistics, since 2022, the daily trading volume of USD/RMB has increased by nearly 60%, now reaching $781 billion, accounting for over 8% of total global daily foreign exchange trading. This indicates a substantial increase in the usage and recognition of the Renminbi in international markets.

Goldman Sachs Forecasts: Reaching 6.85 Within a Year

Market outlooks remain optimistic. Goldman Sachs analysts, based on authorities’ recognition of the Renminbi’s upward momentum, expect the exchange rate to break the 1 USD = 7 RMB threshold by the end of the year, and further appreciate to 6.85 within a year.

Their core logic is that, whether from economic fundamentals or policy orientation, the internationalization of the Renminbi has become a key focus of China’s future policies. Amid increasing global uncertainties such as the US elections, this steady appreciation of the Renminbi actually boosts market confidence in it as an international reserve currency.

In the coming years, this process is expected to accelerate significantly. For investors, this presents both an opportunity to preserve and appreciate RMB assets and a signal of expanding cross-border RMB usage scenarios.