Offshore RMB exchange rate breaks above 6.8, hitting a new high in over three years

With the strong “tailwind” of a robust capital market, the RMB exchange rate has been unstoppable, stabilizing at an important threshold.

On May 7, the offshore RMB against the US dollar surged past 6.80, reaching a high of 6.7977 during trading; the onshore RMB against the US dollar also refused to lag behind, just “one step away” from the 6.80 mark, both hitting their highest levels since February 2023.

As of 4:50 PM, the onshore and offshore RMB against the US dollar were quoted at 6.8014 and 6.7998, respectively.

In fact, since the beginning of the year, the RMB has shown a steady appreciation trend. In the first four months of this year, both onshore and offshore RMB against the US dollar appreciated by approximately 2.5% in total.

Who is the biggest driver behind this round of RMB strength?

The weakness of the US dollar is the direct “trigger.” Wang Qing, Chief Macro Analyst at Orient Securities, told reporters that influenced by easing Middle East tensions and market judgments of possible Japanese intervention in the currency market, the US dollar index has continued to decline since late April, currently falling below 98, leading to a general appreciation of major non-dollar currencies, including the RMB.

As of 4:30 PM on May 7, the US dollar index was at 97.85, down 0.18% intraday, with a year-to-date decline of 0.42%.

This also means that the “retreat” of the US dollar has brought “advances” for most non-dollar currencies, including the RMB.

Where does the confidence for the RMB’s “stable but slightly strong” trend come from? According to Wang Qing, the two main supports are high export growth and solid economic fundamentals—this year’s macroeconomic start has been strong, external trade environment has stabilized, and export growth has accelerated significantly since the beginning of the year, all providing important support for the RMB.

At the same time, the RMB not only shows resilience against the US dollar but also appreciates against a basket of currencies. Data from the China Foreign Exchange Trade System shows that as of April 30, the CFETS RMB basket exchange rate index has risen to near its highest point since early 2025.

Looking ahead, many experts warn that external uncertainties remain high, with many factors influencing the RMB exchange rate’s rise and fall. Tensions in geopolitical situations, complex and severe external trade environments, and uncertainties in US interest rate and exchange rate trends could all disturb the RMB exchange rate. Under the foreign exchange policy goal of preventing excessive appreciation or depreciation, the RMB exchange rate is expected to fluctuate within a two-way range.

Wang Qing stated that while tensions in the Middle East are easing, there may still be variables later, which will continue to be the main factors influencing US dollar movements. The global forex market will remain highly volatile. Moving forward, the RMB exchange rate will mainly stabilize, generally moving inversely to the US dollar with relatively small fluctuations.

Wang Qing also specifically mentioned that after experiencing a deep decline in 2025, the likelihood of a further significant drop in the US dollar index this year is small, considering various influencing factors. This also means that the passive appreciation momentum of the RMB against the US dollar will significantly weaken this year. The RMB’s future exchange rate against the dollar will mainly be stable, with little chance of continuous large appreciation.

“The factors affecting exchange rates are very complex, such as geopolitical issues, sudden events, monetary policy, and financial markets. Currently, changes in these factors internationally are very significant, with high uncertainty,” said Wen Bin, Chief Economist at China Minsheng Bank. He noted that recent turmoil in the Middle East has led to a sharp rise in risk aversion in international financial markets, causing wild fluctuations in the US dollar index. As the market’s role in exchange rate formation increases, the future trend of the RMB exchange rate is highly uncertain, likely to fluctuate both upward and downward.

Wen Bin emphasized that both enterprises and residents should establish a neutral view of exchange rate risk as early as possible, anchored in actual needs, and avoid unilateral bets. Especially for foreign trade companies, they should stick to their main business and appropriately use derivatives such as forwards and options to control exchange rate risk exposure.

(Edited: Wen Jing)

Keywords: RMB Exchange Rate