The recent trend in the RMB exchange rate is really quite interesting. From the beginning of the year until now, in just a few months, offshore RMB has already risen by over 1,400 basis points, setting a new high in nearly three years. I’ve noticed that many people are asking whether it’s time to position for the RMB now, so I’d like to share my views on the outlook.

First, let’s talk about what has happened recently. At the end of last year, the RMB finally broke through the psychological level of 7.0. This year’s start even accelerated the move upward—after the Spring Festival, in just three trading days, it surged by 600 points, once reaching as high as 6.81. Now, in mid-May, offshore RMB has been fluctuating roughly between 6.82 and 6.95. Behind this appreciation, there are actually three main drivers: first, China’s export performance has been too strong, with the trade surplus hitting a historical record high of $1.2 trillion; second, the U.S. dollar index has been generally weak overall, falling from its early-year highs; third, foreign capital is gradually replenishing RMB assets.

To be honest, the logic behind this RMB exchange-rate move is pretty clear. China’s economy is steadily recovering. In the first quarter, GDP grew by 5.0% year over year, exceeding expectations, which naturally attracts capital inflows. With the U.S. dollar factor also aligning, RMB appreciation becomes a natural outcome. However, the central bank also stepped in at the end of February to “cool things down” by cutting the foreign exchange risk reserve ratio, releasing a signal that it does not want the exchange rate to rise excessively in one direction—this is something to pay special attention to.

How should we look ahead? Many international investment banks still remain optimistic. Goldman Sachs maintains an annual target of 6.70, believing there is still about 22% undervaluation room for the RMB; HSBC has adjusted its year-end target to 6.75. But my personal view is that in the short term, the RMB is unlikely to keep surging upward in a one-way trend. More likely, it will trade back and forth and consolidate between 6.83 and 6.92, and there’s even no need to rule out a small pullback.

To judge the RMB exchange rate’s subsequent development, I think there are several key points to watch. First is the central bank’s monetary policy direction—whether it loosens or tightens will directly affect the exchange rate. Second is the performance of the U.S. dollar index; it’s currently fluctuating in a narrow range around 98.0 to 98.5, depending on Federal Reserve policy and geopolitical developments. Next are China’s economic data, especially indicators like exports and GDP. Finally, don’t forget the official guidance on the exchange rate: the central bank’s daily mid-price quotes actually reveal a lot of information.

From an investment perspective, positioning in the RMB does have support right now in terms of themes, but I suggest using a staged positioning strategy—don’t blindly chase higher prices. If you have long-term holding needs or want to hedge U.S. dollar risk, you can consider a reasonable allocation, but you must set take-profit and stop-loss levels and closely monitor the central bank’s actions and trade data. The second quarter is usually a period when companies’ FX purchasing demand is higher, which may also create short-term pressure on the exchange rate—so don’t expect it to keep going without interruption.

Overall, the medium- to long-term logic behind the RMB exchange-rate trend is still supported, but there will be volatility in the short term. As long as the U.S. dollar’s credibility does not show a clear recovery, and China’s economic fundamentals continue to release positive signals, the RMB appreciation momentum still has a chance to continue. However, the market is always dynamic—keep a close eye on the data and think through the logic, and that’s the key to surviving in the foreign exchange market.