RMB breaks through the 7 mark; will it rise further by 2026? Several institutions share their views

On December 25th, the USD against offshore RMB (USD/CNH) fell to 6.9965, and the USD against onshore RMB (USD/CNY) dropped to 7.0051. This is the first time since September 2024 that these psychological thresholds have been touched, and the market has sensed signals of the RMB continuing to appreciate.

Goldman Sachs’s forecast is the most aggressive — the institution believes that the USD against RMB could fall to 6.90 by mid-2026, and further weaken to 6.85 by the end of the year. Bank of America is also optimistic about the RMB, expecting that if US-China relations ease, the USD against RMB could reach 6.80 by the end of 2026. ANZ Bank is more conservative, estimating that in the first half of the year, it will fluctuate within the 6.95-7.00 range.

Why is the RMB daring to break 7?

This round of appreciation is not happening out of thin air. First, the dollar itself has been weakening — under the backdrop of the Federal Reserve’s rate cut cycle, the dollar index has fallen over 10% this year, dropping more than 2% in the past month, with de-dollarization waves fueling the trend. Second, the role of the Chinese central bank behind the scenes cannot be ignored. Data shows that the central bank has continuously raised the midpoint of the RMB exchange rate (the reference rate), actively guiding the appreciation expectations.

The year-end foreign exchange settlement effect is also an important driver. In 2025, China’s trade surplus hit a record high, and as the year-end approached, companies concentrated on settling foreign exchange, which directly boosted the RMB. Meanwhile, the central bank has delayed following up with a new round of rate cuts, and coupled with tight liquidity in the offshore market at year-end, all contributed to the RMB’s strength.

The RMB is still undervalued

Is this wave of rise the end point? Probably far from over. Goldman Sachs’s judgment is worth noting — based on trade-weighted indices and economic fundamentals, they believe the RMB is undervalued by 25% relative to its economic fundamentals. In other words, even if it falls to 6.85, there is still room for further appreciation of the RMB.

Wang Qing, Chief Macro Analyst at Orient Securities, observed that, “The weakening dollar and seasonal foreign exchange conversions by exporters jointly drove the RMB’s strength. Continued RMB appreciation will help enhance China’s capital market attractiveness to foreign investors.” This suggests that the appreciation trend may be self-reinforcing — as the RMB appreciates, it attracts foreign capital, which further pushes up the RMB.

From a trade perspective, the easing of US-China relations improves the outlook for exporters. In 2026, the scale of dollar sales by domestic companies is expected to further expand, which will serve as a sustained driver for RMB appreciation. The market consensus is that, with the combined effects of a weakening dollar, active guidance by the central bank, and trade surplus foreign exchange settlement, breaking 7 is just the beginning, and the probability of continued strength into 2026 is very high.