The USD to RMB exchange rate hits a new high for the year! Goldman Sachs predicts it will rise to 6.85 by 2026, accelerating the internationalization process.

The recent RMB appreciation wave is gaining momentum. As of November 26, the USD onshore RMB (USD/CNY) dropped to 7.0824, and the USD offshore RMB (USD/CNH) fell to 7.0779, both hitting new lows in over a year. What exactly is happening behind the scenes?

Federal Reserve Rate Cuts Open Up Appreciation Space, Central Bank Actively Promotes Exchange Rate Rise

Tracing the driving forces behind this round of RMB appreciation, two main factors stand out. First, the Federal Reserve’s gradual rate cuts have created room for RMB appreciation; second, domestic policy measures are intentionally guiding the exchange rate to strengthen.

The People’s Bank of China (PBOC) sets the daily midpoint (the spot rate fluctuates within ±2% of the midpoint), continuously boosting exchange rate expectations. Meanwhile, state-owned banks frequently buy USD, effectively controlling exchange rate volatility and steadily increasing the USD/RMB rate. Data-wise, the CFETS RMB Exchange Rate Index rose to 98.22 on November 21, reaching its highest level since April this year.

What strategic intentions are implied behind these operations? Kelvin Lam, Senior Economist at Pantheon Macroeconomics, provides an in-depth analysis: “From a macro strategic perspective, Chinese authorities seem to be demonstrating RMB stability to establish international credibility. This recalls the history during the 1998 Asian financial crisis when the RMB refused to participate in competitive devaluation waves, thereby consolidating its regional anchor currency status.”

Market Response Indicates RMB Appreciation Has Deep Significance

Compared to historical data, this appreciation cycle carries special meaning. During the US-China trade war in 2018, the RMB was hit hard and depreciated by about 5%. By 2025, however, the RMB has shown an almost 3% appreciation. This shift reflects a clear policy attitude adjustment.

Kiyong Seong, Chief Asia Macro Strategist at Société Générale, pointed out: “In an environment of significant market volatility, the RMB demonstrating strength and stability provides strong support for advancing RMB internationalization.”

The latest data from the Bank for International Settlements further confirms this. Compared to the last survey in 2022, the average daily trading volume of USD/RMB has increased by nearly 60%, reaching $781 billion, accounting for over 8% of total global daily foreign exchange trading. This indicates that international market attention to the USD/RMB exchange rate is continuously rising.

Goldman Sachs Outlook: Touching 7 Yuan at Year-End, Rising to 6.85 in 2026

Regarding the future trend of USD/RMB, Goldman Sachs analysts have provided a clear forecast. Given the policy support for RMB strength, they expect the exchange rate to reach the 1 USD to 7 RMB mark by the end of the year, and then continue appreciating to 6.85 within a year.

Goldman Sachs believes that, considering both economic and non-economic factors, RMB internationalization has become a core policy focus of the Chinese government, with significant acceleration expected in the coming years. This means that the current rise in USD/RMB is not just short-term volatility but a concrete manifestation of a long-term internationalization strategy.