The acceleration key to RMB internationalization: Why has the exchange rate continuously broken through 7 amid the Fed's rate cuts and the US presidential election?

Driven by the dual forces of the Federal Reserve’s rate cut cycle initiation and changes in the U.S. presidential election political landscape, the RMB’s recent performance against the US dollar has been strong. As of November 26, the onshore USD/CNY exchange rate fell to 7.0824, and the offshore USD/CNH exchange rate fell to 7.0779, hitting a new low in over a year. What does this reflect?

From Passive Appreciation to Active Appreciation: The Strategic Game Behind Policy Signals

Data shows that the CFETS RMB Exchange Rate Index rose to 98.22 on November 21, the highest since April this year. This is not a spontaneous market trend but a result of deliberate guidance by the central bank.

The People’s Bank of China (PBOC) has been steadily pushing up the exchange rate through daily midpoint setting (with the exchange rate fluctuating within a 2% band around the midpoint), with state-owned banks frequently entering the market to buy US dollars to stabilize fluctuations. As a result, the exchange rate has shown a steady upward trend. The latest data from the Bank for International Settlements indicates that since 2022, the daily average trading volume of USD against RMB has increased by nearly 60% to $781 billion, accounting for over 8% of the global daily foreign exchange trading volume. This surge in trading volume precisely indicates market recognition of the RMB’s appreciation expectations.

Kelvin Lam, senior economist at Pantheon Macroeconomics, believes that from a strategic perspective, Chinese authorities are attempting to establish an international credit foundation by demonstrating the RMB’s stability, similar to how the RMB refused to depreciate and established regional anchor currency status during the Asian financial crisis in 1998. The global political landscape adjustment after the U.S. presidential election has further heightened the urgency of this strategy.

Market Response: From Passive Acceptance to Active Allocation

Comparative data best illustrates the issue. During the U.S.-China trade war in 2018, the RMB depreciated by about 5%; however, from 2025 to now, the RMB has appreciated by nearly 3%. This contrast reflects a shift in market confidence in the RMB’s appreciation trend.

Kiyong Seong, chief Asian macro strategist at Société Générale, pointed out that demonstrating RMB stability and strong performance in the current unstable international environment is an effective measure to promote RMB internationalization. The uncertainty surrounding the U.S. presidential election further reinforces international capital’s demand for RMB stability.

Goldman Sachs Forecast: The Underlying Logic for Reaching 6.85 in 2026

Based on current policy attitudes, Goldman Sachs analysts believe that the RMB against the US dollar is expected to reach 7.0 by the end of this year and further appreciate to 6.85 in 2026. This forecast is supported by two dimensions:

Economic: The ongoing Fed rate cut cycle provides a fundamental condition for RMB appreciation, and the recovery of China’s endogenous economic momentum will further support the exchange rate.

Policy: After the U.S. presidential election, the reshaping of the global political and economic landscape has made RMB internationalization a clear policy orientation of the Chinese government. In the coming years, this process is expected to accelerate significantly, with the share of RMB in international reserves and cross-border transactions continuing to increase.

The RMB’s strong appreciation is not just a change in exchange rate figures but also a significant enhancement of China’s voice in the international monetary system.