The RMB appreciation drama continues, with institutions predicting it will rise further by 2026?

The recent performance of the RMB against the US dollar has been impressive, sparking widespread market attention about the future outlook. On December 25, the USD/CNH (offshore RMB) fell to 6.9965, hitting a new low since September 2024; the USD/CNY (onshore RMB) dropped to 7.0051, the lowest level since May 2023. For a moment, news of the RMB breaking the 7-level barrier flooded the investment community.

Is there room for appreciation in 2026? Multiple institutions provide forecasts

From the perspectives of major banks and investment institutions, the story of RMB appreciation may not be over yet. Goldman Sachs is the most optimistic about the RMB’s future, believing that, based on economic fundamentals, the RMB is undervalued by 25%. The bank expects the USD/CNY exchange rate to fall to 6.90 by mid-2026, with further decline to 6.85 by the end of the year.

ANZ senior strategist Xing Zhaopeng offers a relatively conservative forecast, suggesting that in the first half of 2026, the USD/CNY may fluctuate within the 6.95-7.00 range. However, Bank of America is more optimistic, stating that easing US-China relations will improve the outlook for Chinese exporters, and the USD/CNY could fall to 6.80 by the end of 2026.

In other words, regardless of which forecast proves true, there is still room for the RMB to continue appreciating.

The three main drivers of current appreciation

The current RMB appreciation is not happening out of thin air. First, the US dollar index has been weak. Driven by the Federal Reserve’s rate cuts and the global de-dollarization trend, the dollar index has fallen more than 10% this year, with a decline of over 2% in the past month. A weak dollar directly benefits the RMB’s relative strength.

Second, the central bank is actively guiding. The People’s Bank of China has continuously raised the midpoint of the RMB exchange rate this year, signaling support for RMB appreciation. This proactive adjustment has provided policy backing for the RMB’s strength.

Third, the year-end foreign exchange settlement wave. In 2025, China’s foreign trade remained strong, and the accumulated trade surplus was concentrated for settlement at year-end, leading to large-scale USD to RMB conversions and creating a phase of appreciation momentum.

Wang Qing, Chief Macro Analyst at Orient Securities, pointed out that the combination of a weak dollar and seasonal foreign exchange conversions by exporters has driven the RMB’s appreciation. He also mentioned a positive signal: the continued appreciation of the RMB will help enhance China’s capital market attractiveness to foreign investors.

Deeper logic: Is the RMB really still cheap?

From a deeper perspective, even if the RMB has appreciated to this level, there is still room for further appreciation. Many analysts believe that, when measured by trade-weighted indices and China’s economic fundamentals, the RMB’s true value has not yet been fully recognized.

Recent policy orientations of the central bank also reveal some clues—no further interest rate cuts have been made, which to some extent reflects considerations about RMB stability and appreciation potential. Additionally, offshore liquidity has been somewhat tight due to holiday effects, further boosting the RMB’s relative value.

Overall, the main trend for 2026 is likely to be RMB appreciation. Although forecasts vary among institutions, the direction of appreciation is highly consistent. For investors, this not only reflects China’s economic resilience but also highlights the importance of monitoring exchange rate fluctuations’ deep impacts on cross-border investment, trade, and asset allocation.