USD to RMB Exchange Rate Outlook for 2026: Current Investment Window Analysis

The performance of the Renminbi in 2025 can be described as a “bright future after darkness.” After ending three consecutive years of depreciation against the US dollar, this year witnessed a clear shift in the exchange rate trend. Looking at the annual data, the USD/RMB exchange rate fluctuated bidirectionally within the 7.1 to 7.3 range, appreciating a total of 2.40%, demonstrating strong resilience. The offshore RMB experienced slightly larger fluctuations, moving between 7.1 and 7.4, with an appreciation of 2.80%.

November 26, 2025, became a key milestone—driven by easing US-China trade relations and rising expectations of Federal Reserve rate cuts, the RMB appreciated against the dollar to below 7.08, reaching a low of 7.0765, marking the strongest performance in nearly a year.

Exchange Rate Trend Review: From Pressure to Reversal

The first half of the year was indeed under significant pressure. Increased global tariff policy uncertainties and a continuously strengthening US dollar index caused offshore RMB to briefly break below 7.40, with the USD/RMB rate reaching a new high since the 2015 exchange rate reform. Market sentiment was once full of depreciation expectations.

The turning point appeared in the second half. As US-China trade negotiations gradually advanced and the international situation stabilized, the US dollar index shifted from strength to weakness, and the RMB exchange rate reversed its downward trend. Against the backdrop of major non-US currencies like the euro and pound generally appreciating, the RMB also participated in this wave of appreciation, with market sentiment shifting from pessimism to stability.

Current Investment Opportunities: Short-term Maintains a Slightly Stronger Pattern

For current investment strategies, participating in USD/RMB-related products indeed offers profit opportunities, but timing is crucial.

In the short term, the RMB is expected to remain relatively strong, showing inverse fluctuations with the US dollar, but with limited amplitude, mainly characterized by range-bound oscillations. The probability of the RMB quickly appreciating below 7.0 before the end of 2025 is low. Therefore, investors should focus on three key variables: the subsequent performance of the US dollar index, policy signals from the RMB midpoint rate, and the implementation strength of China’s stabilizing growth policies.

Five-Year Retrospective: Understanding USD/RMB Exchange Rate Cycles

A deep look at the exchange rate trends over the past five years can help us better understand the current pattern:

2020, Pandemic Shock Year: In early 2020, USD/RMB fluctuated between 6.9 and 7.0, with a brief depreciation to 7.18 in May. However, as China took the lead in controlling the pandemic and rapidly recovered economically, coupled with the Fed cutting rates to near zero and widening US-China interest rate differentials, the RMB rebounded strongly to around 6.50 by year-end, appreciating about 6% for the year.

2021, Continued Strength: Export remained robust, and the central bank maintained prudent policies. The USD index hovered at low levels, with USD/RMB fluctuating narrowly between 6.35 and 6.58, averaging 6.45 for the year, with the RMB maintaining relative strength.

2022, Sharp Turn: Aggressive Fed rate hikes and soaring USD index pushed USD/RMB above 7.25, depreciating about 8% for the year. Meanwhile, China’s strict pandemic policies and real estate crisis hit the economy hard, leading to low market confidence.

2023, Continued Pressure: USD/RMB fluctuated between 6.83 and 7.35, averaging around 7.0. Economic recovery was weaker than expected, with ongoing real estate debt issues and sluggish consumption, while high US interest rates kept the USD index between 100 and 104.

2024, Initial Turning Point: The USD weakened, easing pressure on the RMB. China’s fiscal and real estate support policies stabilized market expectations. USD/RMB rose from 7.1 to around 7.3 by mid-year, with increased volatility.

2026 Exchange Rate Forecast: Multiple Institutions Favor Appreciation

Market consensus is gradually forming: the depreciation cycle starting in 2022 may have bottomed out, and the RMB has the opportunity to initiate a new round of medium- to long-term appreciation. Looking towards the end of 2025 and into 2026, three main supporting factors deserve attention:

Resilient Chinese exports: Despite complex external environments, export growth still shows resilience.

Reallocation of foreign investment into RMB assets: International investors are gradually regaining interest in RMB assets.

Structural weakening of the US dollar index: Long-term, the dollar is unlikely to sustain strength.

International investment banks generally hold an optimistic outlook. Deutsche Bank believes the RMB may enter a long-term appreciation cycle, expecting it to reach 7.0 by the end of 2025 and further appreciate to 6.7 by the end of 2026. Morgan Stanley also expects moderate RMB appreciation, with the USD index falling back to 89, implying USD/RMB could reach around 7.05.

Goldman Sachs has a more aggressive view. In a May report, they raised their 12-month USD/RMB forecast from 7.35 to 7.0, suggesting the RMB could “break 7” sooner than market expectations. Their logic is that the current real effective exchange rate of the RMB is undervalued by 12% relative to the ten-year average, and by 15% against the dollar. Based on progress in US-China trade negotiations and the reality of undervaluation, Goldman Sachs sees considerable room for RMB appreciation over the next 12 months. Meanwhile, strong Chinese export performance will support this trend, and the Chinese government is more likely to choose other policy tools rather than currency devaluation to stimulate the economy. Specific target prices are: 3-month target of 7.2, 6-month target of 7.1.

Factors Influencing Medium- and Long-term Trends

The future direction of USD/RMB exchange rate is affected by multiple factors, which can be analyzed from both external and internal perspectives:

External Factors—US Dollar Index and International Trade: The USD index directly determines USD/RMB movements. In the first five months of 2025, the USD index fell sharply by 9%, marking the worst start to a year in history. Market expectations are that the Fed will start a rate-cut cycle, lowering short-term rates, which could lead to further USD depreciation, with Asian currencies including the RMB likely to continue appreciating.

US-China Relations: Progress in trade negotiations directly impacts market expectations. If tariff conflicts gradually ease, the RMB will be supported; otherwise, it faces depreciation pressure.

Fed Policy Direction: The Fed signaled rate cuts in the second half of 2024, but the pace of cuts in 2025 depends on inflation data, employment market performance, and policies of the Trump administration. High inflation may slow rate cuts, supporting the dollar; economic slowdown may accelerate rate cuts, weakening the dollar.

Internal Factors—Chinese Central Bank Policies and Economic Data: The People’s Bank of China tends to maintain an accommodative stance to support economic recovery, especially amid weak real estate and insufficient domestic demand. Rate cuts or reserve requirement ratio reductions usually exert downward pressure on the RMB. However, if accommodative monetary policy is combined with strong fiscal stimulus to stabilize the economy, the RMB could be supported in the long term. The advancement of RMB internationalization and currency swap agreements with other countries also contribute to long-term exchange rate stability.

How Investors Can Capture Exchange Rate Trends

To judge the future direction of USD/RMB, continuous observation of the following aspects is necessary:

First, China’s monetary policy stance: The central bank’s easing or tightening directly impacts money supply. Easing (rate cuts, reserve ratio reductions) increases RMB supply and exerts downward pressure on the exchange rate; tightening has the opposite effect. At the end of 2014, the PBOC launched a easing cycle, cutting rates six times and significantly reducing reserve requirements, during which USD/RMB rose from 6 to nearly 7.4, demonstrating the policy’s profound influence.

Second, China’s economic fundamentals: Stable economic growth attracts sustained foreign investment, increasing demand for RMB and pushing up the exchange rate; slowing growth has the opposite effect. Key indicators include GDP, PMI, CPI, and urban fixed asset investment.

Third, USD trend indicators: The USD index directly reflects USD strength against RMB. For example, in 2017, as Eurozone economies accelerated, ECB signaled tightening, and the USD index broke above 100 then weakened, leading to a 15% decline in the USD index for the year, with USD/RMB also trending downward.

Fourth, official policy orientation: RMB exchange rate is not entirely market-driven. In the last reform in 2017, the central bank adjusted the midpoint rate model to “closing price + a basket of currencies exchange rate change + countercyclical factor,” strengthening official guidance. While this mechanism has a short-term impact, the long-term trend remains dominated by market direction.

Investment Channels

Investing in USD/RMB exchange rate can be done through various channels:

Traditional bank channels: Opening foreign exchange accounts with local or international banks for trading.

Forex brokers: Partnering with reputable forex brokers offering online platforms and professional tools. Most platforms support two-way trading (long and short) and leverage, allowing traders to gain larger market exposure based on capital.

Securities firms: Some securities companies provide forex trading services.

Futures markets: Trading USD/RMB futures on futures exchanges.

Overall Judgment

As China’s monetary policy enters a sustained easing cycle, USD/RMB is set to trend more clearly. Based on similar historical policy cycles, this appreciation phase could last around ten years, with short- to medium-term fluctuations driven by USD movements and major events. By focusing on the core factors influencing the exchange rate, investors can significantly improve their trading profitability. The forex market features transparent and publicly available influencing factors, large trading volume, and supports two-way operations, making it a relatively fair and advantageous investment field for individual investors.