USD to CNY exchange rate outlook for 2026: What is the current buying opportunity?

The Current State of the Renminbi Exchange Rate You Need to Know

Looking at the performance in 2025, the Renminbi has shown unexpected resilience against the US dollar. As an investor, you may notice that throughout this year, USD to RMB has repeatedly fluctuated between 7.1 and 7.3, with an appreciation of 2.40% for the entire year. On November 26, influenced by the improvement in China-US trade relations and rising expectations of Federal Reserve rate cuts, the RMB temporarily appreciated to below 7.08, reaching a low of 7.0765, hitting a nearly one-year high.

What does this shift mean? Simply put, the RMB, which has depreciated for three consecutive years, seems to be reversing its trend.

The offshore market is even more sensitive—USD to offshore RMB fluctuated between 7.1 and 7.4, with a cumulative appreciation of 2.80%, slightly higher than the onshore market. This reflects differing expectations among international capital regarding the RMB outlook. In the first half of the year, global uncertainties around tariffs and a strengthening US dollar index once caused offshore RMB to break below 7.40, setting a new record since the 8.11 exchange rate reform in 2015. However, as China-US negotiations advanced and the dollar index weakened, the situation gradually stabilized, and the RMB began a gentle rebound.

Can You Still Profit from Investing in RMB Now?

The answer is yes, but the key is whether you seize the right timing.

In the short term, the RMB is expected to maintain a relatively strong stance, moving inversely to the US dollar. However, it is unlikely to appreciate rapidly and break below 7.0 before the end of 2025. The upcoming trend will be constrained by three major uncertainties: the direction of the dollar index fluctuations, signals from the RMB central parity rate adjustments, and the implementation of China’s steady-growth policies.

Historical Cycles of RMB Exchange Rate Movements

Understanding the past helps in grasping the future. The RMB exchange rate fluctuations over the past five years almost encapsulate the broader changes in the global economy.

Strong performance during the pandemic (2020-2021)

In early 2020, USD to RMB fluctuated between 6.9 and 7.0. But amid the pandemic shock, RMB depreciated to around 7.18. The turning point came mid-year—China was among the first to control the pandemic, with rapid economic recovery. Coupled with the Federal Reserve cutting rates to near zero and China maintaining prudent policies, the interest rate differential widened, and the RMB rebounded strongly to around 6.50 by year-end, appreciating about 6% for the year.

In 2021, this strength continued. China’s exports surged, the central bank maintained stable policies, and the US dollar index remained low. USD to RMB fluctuated narrowly between 6.35 and 6.58, with an annual average around 6.45.

Impact of Fed rate hikes (2022)

2022 was a turning point. The Fed aggressively raised interest rates, causing the dollar index to soar. USD to RMB jumped from 6.35 to over 7.25, depreciating about 8% for the year, the largest decline in recent years. Meanwhile, China’s pandemic policies hampered economic growth, and a worsening real estate crisis further undermined market confidence.

Slow adjustment period (2023-2024)

In 2023, USD to RMB fluctuated between 6.83 and 7.35, averaging about 7.0. China’s post-pandemic economic recovery fell short of expectations, with ongoing real estate issues and sluggish consumption, while the US maintained high interest rates between 100 and 104 basis points.

In 2024, changes emerged—weakening US dollar alleviated pressure on the RMB. China’s fiscal stimulus and support measures for real estate boosted market confidence. By mid-year, USD to RMB rose to around 7.3, offshore RMB broke through 7.10 in August, hitting a new high for the half-year, with volatility increasing significantly.

Three Major Supports for Future USD-RMB Trends

Many international investment banks now generally believe that the depreciation cycle starting in 2022 is nearing its end, and the RMB is at the beginning of a new appreciation cycle.

Three factors support this view:

First, China’s export resilience

Even amid global economic turbulence, China’s exports have demonstrated strong vitality, providing a solid demand foundation for the RMB.

Second, reallocation of foreign capital into RMB assets

After years of hesitation and exit, international investors are now reassessing the value of RMB assets. This reallocation trend is gradually establishing itself and will continue to push the RMB higher.

Third, structural weakening of the US dollar index

The Fed’s rate cut cycle has begun, and with the performance of major non-US currencies like the euro, the dollar faces long-term depreciation pressures. In this context, the RMB has opportunities to appreciate accordingly.

What Do Major International Banks Say About 2026?

Deutsche Bank believes the RMB is entering a long-term appreciation cycle. The bank forecasts the USD to RMB exchange rate will reach 7.0 by the end of 2025 and further appreciate to around 6.7 by the end of 2026.

Morgan Stanley is also optimistic about the RMB, expecting a moderate appreciation trend. They predict the dollar will continue weakening over the next two years, with the dollar index possibly falling to 89 by 2026, corresponding to an RMB/USD rate of about 7.05.

Goldman Sachs holds a more aggressive view. In a May report, the bank’s global FX strategists raised their 12-month RMB forecast from 7.35 to 7.0 and even hinted that “breaking 7” could happen faster than market expectations. Their logic is that the current real effective exchange rate of RMB is undervalued by 12% relative to the ten-year average, with an even deeper undervaluation of 15% against the dollar. Based on progress in China-US trade negotiations and the undervaluation, RMB could appreciate to 7.0 within 12 months.

Goldman Sachs also pointed out that strong Chinese exports are a solid support for the RMB, and the Chinese government prefers to stimulate the economy through other policy tools rather than relying on currency depreciation. Their forecast target prices are: 7.2 within 3 months, and 7.1 within 6 months.

Four Key Factors You Should Focus On

USD Index Trends

In the first five months of 2025, the dollar index fell by 9%, marking the worst start to the year. Market expectations are that the Fed’s rate cut cycle will lower short-term interest rates, implying the dollar could depreciate further over the next 12 months. This is positive for Asian currencies, including the RMB.

Progress in China-US Negotiations

Although China and the US shook hands again after negotiations in London, how long this truce can last remains uncertain. Historically, similar agreements have quickly fallen apart, so tariffs and trade tensions remain key variables affecting the exchange rate. Smoother negotiations support the RMB, while escalating tensions exert downward pressure.

Federal Reserve Policy Direction

The Fed’s monetary policy is the lifeline of the dollar’s trend. Signals of rate cuts in the second half of 2024 have been issued, but the pace and magnitude of cuts in 2025 will depend on inflation data, employment figures, and policies of the Trump administration. If inflation remains high, rate cuts may slow or keep interest rates high, supporting the dollar; conversely, economic slowdown could accelerate rate cuts and weaken the dollar. The RMB and USD usually move inversely.

Transmission of Chinese Policies

China tends to maintain an accommodative monetary policy to support economic recovery, especially amid weak real estate and sluggish domestic demand. Rate cuts or reserve requirement ratio reductions by the People’s Bank of China will release liquidity, exerting short-term downward pressure on the RMB. However, if easing policies are combined with strong fiscal stimulus to stabilize the economy, the RMB could be supported in the long run.

How to Judge RMB Trends Yourself?

Instead of passively waiting for analysis, it’s better to master judgment methods. The following four perspectives can help you analyze independently:

1. Central Bank Monetary Policy

The People’s Bank of China’s policy stance directly influences money supply and thus the exchange rate. Easing policies like rate cuts or reserve ratio reductions increase supply expectations, leading to RMB depreciation; tightening policies like rate hikes or reserve ratio increases shrink liquidity, supporting RMB appreciation.

Historical example: Starting November 2014, the PBOC entered an easing cycle, cutting rates six times and significantly lowering reserve requirements, reducing the reserve ratio for small and medium-sized banks from 18% to below 8%. During this period, USD to RMB rose from 6 to nearly 7.4, illustrating the profound impact of monetary policy.

2. China’s Economic Data Performance

Stable or outperforming economic growth compared to other emerging markets attracts foreign investment, increasing RMB demand and pushing up the exchange rate; conversely, economic slowdown leads to capital outflows and RMB depreciation.

Key data points to monitor:

• GDP: Released quarterly, reflects macroeconomic health
• PMI: Official and Caixin versions monthly; official focuses on large and medium enterprises, Caixin on small and medium enterprises
• CPI: Monthly, measures inflation
• Fixed Asset Investment: Monthly cumulative data, indicates economic activity

3. Strength of the US Dollar Index

The dollar’s strength directly determines USD to RMB movements. The policies of the Fed and the European Central Bank are often decisive.

Example: Early 2017, as the Eurozone economy recovered strongly and GDP growth outpaced the US, the ECB signaled tightening, attracting funds from the dollar into the euro. The dollar index fell 15% that year, and USD to RMB also declined accordingly.

4. Official Guidance on Exchange Rate

Since China’s reform and opening up in 1978, the RMB has undergone multiple exchange rate management reforms. The last major adjustment in May 2017 modified the central parity rate model from “closing price + a basket of currencies” to include a “counter-cyclical factor,” strengthening official guidance. However, recent observations suggest that while this guidance influences short-term rates, the medium- and long-term trend still depends on market direction.

Ways to Invest in RMB Yourself

Commercial and International Banks

The most traditional method—investors can open foreign exchange accounts at local or international banks for trading.

Forex Brokers

Many margin trading platforms allow holding both long and short positions, meaning you can profit from both rising and falling markets if your judgment is correct. Most platforms support leverage, enabling larger exposure with less capital, but leverage also increases risk. Use it prudently.

Reputable platforms include Mitrade, XTB, Admirals, Plus500, IG, etc. For example, Mitrade is regulated by CIMA (SIB license 1612446), offers 24-hour trading, supports two-way trading with leverage up to 1-200, charges no commission, with a minimum lot size of 0.01, suitable for small investors. New users can get a USD10 bonus, up to USD100. The platform also provides a $50,000 demo account for practice.

Securities Firms

Some securities companies also offer forex trading services on designated platforms.

Futures Exchanges

Invest in forex through futures markets by opening accounts for forex futures trading.

Conclusion: How Should You Decide?

As China enters a sustained easing cycle in monetary policy, the USD to RMB trend will become more pronounced. Based on historical experience, such cycles can last up to ten years, with short- and medium-term fluctuations caused by dollar volatility and other events, but the overall direction is established.

By understanding and monitoring the core factors influencing RMB—central bank policies, economic data, dollar trends, and official guidance—you can significantly improve your chances of profit. The forex market is driven by macro factors, with transparent data, large trading volumes, and support for two-way trading, making it a fair and advantageous investment field for individual investors. The key is thorough research and timing.