Has the RMB appreciation inflection point arrived? 2026 Exchange Rate Forecast and Investment Opportunity Analysis

Key Signals Behind the USD to RMB Exchange Rate Chart

The RMB performance in 2025 has shown a trajectory completely different from the past three years. On the USD to RMB exchange rate chart, we clearly see an upward trend—this is not RMB depreciation, but appreciation. From 7.1 at the beginning of the year to falling below 7.08 in November, and then touching 7.0765, the RMB has achieved its best performance in nearly a year.

What is behind this shift? Simply put, three forces are driving it: improvement in US-China trade relations, rising expectations of Fed rate cuts, and systematic weakening of the US dollar index. The offshore RMB fluctuated between 7.1 and 7.4, appreciating 2.80% over the year, more than the 2.40% gain in the onshore market. This indicates that international capital is re-evaluating the value of RMB assets.

Historical Comparison: RMB Is Emerging from a Depreciation Cycle

To understand the significance of the current situation, we need to look back over the past five years. During the pandemic in 2020, the USD to RMB exchange rate once fell near 6.3, showing strong RMB strength. But starting in 2022, aggressive Fed rate hikes caused the US dollar index to soar above 105, and the RMB entered a three-year depreciation journey, reaching as high as 7.35.

The performance in 2023 and 2024 further confirmed this trend. Although China’s economy stabilized in 2024, the RMB still hovered between 7.1 and 7.3. It was only in 2025 that the situation truly changed. The US dollar index plummeted from 104 at the start of the year to below 95, a decline of 9%, marking the worst start to a year on record. Against this backdrop, RMB appreciation became a natural outcome.

Consensus Among Top Institutions: RMB Breaking 7 Is Imminent

Regarding future trends, major global investment banks have reached a consensus—the RMB appreciation cycle is beginning.

Deutsche Bank expects the RMB against the dollar to rise to 7.0 by the end of 2025, and further to 6.7 by the end of 2026. This means there is at least 5% room for appreciation from current levels.

Morgan Stanley’s logic is more straightforward. The institution believes the dollar will continue to weaken over the next one to two years, predicting that by 2026, the dollar index could fall back to 89, corresponding to an RMB/USD rate of about 7.05.

The most aggressive view comes from Goldman Sachs. In a report in May, the head of FX strategy pointed out that the real effective exchange rate of RMB is undervalued by 12% compared to its ten-year average, with a 15% undervaluation against the dollar. This underestimation indicates significant room for correction. Goldman Sachs forecasts that RMB/USD will rise to 7.0 within the next 12 months, and the timing of breaking 7 could come sooner than market expectations. Their 3-month and 6-month target prices are 7.2 and 7.1, respectively.

The underlying logic is solid: China’s exports remain strong, and the government prefers to stimulate the economy through fiscal tools rather than currency devaluation. This provides lasting demand-side support for the RMB.

Four Major Factors Influencing Future RMB Trends

Understanding the RMB exchange rate requires observing four dimensions:

USD Index Trend is the most direct influence. In the first five months of 2025, the USD index fell by 9% cumulatively, with markets generally expecting the Fed’s rate cut cycle to continue. As long as the dollar remains weak, Asian currencies including the RMB will gain upward momentum.

US-China Tariff Negotiation Progress determines the short- to medium-term upper and lower bounds of the RMB. Although recent signs of easing have appeared, the outcome of negotiations remains uncertain. If tariff tensions further ease, the RMB will be supported; if tensions escalate, depreciation pressures will re-emerge.

Fed Policy Pace has far-reaching impacts. Inflation data, employment conditions, and policies of the Trump administration will influence the Fed’s rate cut magnitude. If rate cuts exceed expectations, the dollar will face greater depreciation pressure, and vice versa. The RMB trend usually moves inversely to the dollar index.

People’s Bank of China’s Policy Orientation concerns the long-term tone. During periods of monetary easing, the currency typically faces depreciation pressure, but if easing is coupled with strong fiscal stimulus that stabilizes the economy, the RMB’s long-term outlook remains positive. Additionally, the official guidance on the RMB midpoint also plays an increasingly important role.

How Should Investors Judge RMB Trends?

Mastering the following three observation dimensions can significantly improve prediction accuracy:

First, China’s monetary policy pulse. When the central bank signals rate cuts or reserve requirement ratio reductions, the RMB may face short-term depreciation pressure; conversely, rate hikes can attract capital and push the RMB higher. But these are only short-term effects. More importantly, whether liquidity can be truly stabilized through easing policies combined with fiscal support to sustain economic growth.

Second, China’s economic data performance. GDP, PMI, CPI, fixed asset investment, and other data directly influence foreign capital inflows. When economic data exceeds expectations, foreign investors continue to buy RMB assets, boosting demand and exchange rates. Relative performance compared to other emerging markets is especially critical.

Third, changes in the overall US dollar environment. Differences in policies between the Fed and the European Central Bank can lead to shifts in capital flows. For example, in 2017, when the ECB signaled tightening and the euro strengthened, the dollar index fell by 15% throughout the year, benefiting the RMB. This correlation remains unchanged to this day.

Is Investing in RMB-Related Currency Pairs Profitable Now?

The answer is yes, but timing is crucial. The RMB is expected to remain relatively strong in the short term, with limited fluctuations inversely correlated with the dollar. The rapid appreciation into sub-7 levels before the end of 2025 is less likely, but the probability of breaking 7 in the first half of 2026 has already increased significantly.

There are various channels for investing in RMB. The traditional way is through local commercial banks or international banks opening foreign exchange accounts; or collaborating with forex brokers via professional trading platforms. Many forex margin platforms allow investors to hold both long and short positions simultaneously, meaning profits can be made whether the RMB appreciates or depreciates, as long as the trend is correctly judged.

Most forex platforms support leverage trading, enabling smaller capital to control larger positions. However, leverage is a double-edged sword—it amplifies gains but also risks. Choosing brokers with authoritative regulation and larger platform scale is fundamental—these platforms usually have comprehensive risk management tools like stop-loss, take-profit, trailing stops, and negative balance protection to ensure losses do not exceed initial investments.

Securities firms and futures exchanges also offer forex investment channels, which investors can choose based on their conditions. For small investors, forex margin platforms are the most convenient due to their low minimum deposits (usually starting at $50) and flexible leverage settings.

Summary: Investment Nodes in the RMB Appreciation Cycle

From a macro perspective, China’s monetary policy remains accommodative, coupled with structural weakening of the dollar, signaling the start of an RMB appreciation cycle. Such cycles can last for years, with fluctuations caused by dollar volatility and trade events, but the overall direction is set.

Investors’ task is simple: closely monitor Fed policy developments, US-China trade negotiations, Chinese economic data releases, and official guidance signals on the RMB midpoint. As long as these major directions remain unchanged, the RMB appreciation trend will be difficult to reverse.

Due to its large trading volume, two-way mechanism, and macro attributes, the forex market offers a relatively fair investment environment for ordinary investors. Understanding the logic behind the USD to RMB exchange rate chart not only helps interpret the current situation but also enables capturing future investment opportunities.