The RMB to USD exchange rate breaks 7: Will it rise further by 2026? Several institutions provide forecasts

The appreciation channel of the RMB against the US dollar has already opened. On December 25, the USD offshore RMB exchange rate fell to 6.9965, hitting the lowest level since September 2024, while onshore RMB even touched 7.0051, marking the first time since May 2023 that this psychological threshold has been broken. Driven by multiple rounds of Federal Reserve rate cuts and the global de-dollarization process last year, RMB appreciation has become a market consensus.

Multiple Factors Jointly Drive RMB Appreciation

The current strength of the RMB is not accidental. The changes in the foreign exchange market stem from three forces—US dollar depreciation, central bank policy guidance, and year-end foreign exchange settlement effects.

The most direct signal of dollar weakness comes from the Federal Reserve’s rate cut cycle. Since 2024, the US dollar index has fallen by over 10%, with a decline of more than 2% in just the past month. As the world’s primary reserve currency, the weakening of the dollar naturally benefits the RMB’s appreciation potential.

From a policy perspective, the People’s Bank of China (PBOC) has been raising the midpoint of the RMB exchange rate throughout the year, guiding expectations of RMB appreciation in an orderly manner. This “moderate push” approach avoids rapid exchange rate fluctuations and allows the market to fully digest the pace of appreciation.

Year-end specific foreign exchange settlement also plays a significant role. In 2024, China’s trade surplus is substantial, and as the year-end approaches, enterprises settle foreign exchange to optimize financial statements. This seasonal demand directly pushes the RMB past the 7 threshold. Additionally, the central bank maintains a cautious monetary policy (without further rate cuts), and tight liquidity in the offshore market has also indirectly supported the RMB’s rise.

Wang Qing, Chief Macro Analyst at Orient Securities, pointed out: “The weak dollar and seasonal foreign exchange settlement behaviors of exporters jointly drive the RMB’s strength. This appreciation will enhance China’s capital market attractiveness to global funds.”

Institutions Generally Bullish on RMB Appreciation by 2026

Although the RMB has broken through the 7 threshold, investment institutions believe there is still room for appreciation. Based on the trade-weighted index and domestic inflation conditions, the RMB remains undervalued.

Xing Zhaopeng, Senior Strategist at ANZ Bank, predicts that in the first half of 2026, the USD/RMB exchange rate will fluctuate between 6.95 and 7.00, indicating further potential for RMB appreciation.

Goldman Sachs’s outlook is even more optimistic. The bank believes that the RMB is undervalued by about 25% relative to economic fundamentals, expecting the USD/RMB to fall to 6.90 by mid-2026 and further to 6.85 by the end of the year. This forecast implies that the RMB could appreciate by over 2% in the next year.

Bank of America emphasizes the impact of trade dynamics. As US-China relations ease, the scale of Chinese exporters’ USD selling will expand, and it is expected that by the end of 2026, USD/RMB will fall to 6.80, representing the most aggressive appreciation forecast.

Looking at the correlation with AUD/USD, during the RMB appreciation cycle, the Australian dollar often benefits from improved Chinese economic outlooks, further reinforcing market optimism about the exchange rate prospects of emerging Asian markets.

Overall, the consensus among multiple global investment banks points in the same direction: the RMB’s appreciation against the USD will continue into 2026, with an expected increase of 1-3%, which is a positive signal for investors holding RMB assets.