Recently, I noticed a pretty interesting phenomenon: the trend of the RMB exchange rate has indeed experienced a clear turning point over the past two years. The depreciation cycle that started in 2022 now seems to be truly coming to an end.

Looking back, the performance of the RMB against the US dollar in 2025 was actually quite good. The full-year appreciation was 2.4%, and the offshore market even appreciated by 2.8%. By November at the year's end, driven by easing US-China trade tensions and expectations of Federal Reserve rate cuts, the RMB once appreciated below 7.08, with a low of 7.0765, the highest in nearly a year. Compared to the mid-year period when tariffs and a strong dollar made things difficult, the rebound in the second half was quite noticeable.

Now, mid-2026, the market generally believes that the RMB may be at an important cyclical turning point. Several major investment banks have issued relatively optimistic forecasts. Deutsche Bank believes the RMB against the dollar could rise to 7.0 by the end of the year, and even further to 6.7 by the end of next year. Morgan Stanley's expectations are similar, judging that the dollar will continue to weaken over the next two years, with the dollar index possibly falling back to around 89 by year-end. Goldman Sachs even straightforwardly states that the real effective exchange rate of the RMB is undervalued by 12% compared to the ten-year average, with a deeper undervaluation against the dollar at 15%.

The logic supporting RMB appreciation is actually quite clear. China's export resilience remains strong, the trend of foreign capital reallocating into RMB assets is gradually establishing, plus the structural weakness of the US dollar index—all of these are positive factors for the medium to long term. As for the USD/RMB trend forecast, the key still depends on the Fed’s pace of rate cuts, progress in US-China negotiations, and the monetary policy stance of the People's Bank of China.

From an investment perspective, judging the RMB exchange rate trend indeed requires a multi-dimensional approach. First is the central bank’s monetary policy—loose policies usually exert depreciation pressure on the RMB, but if combined with strong fiscal stimulus to stabilize the economy, it can be a long-term positive. Next are economic data—GDP, PMI, CPI—all influence foreign capital inflow intentions. Then is the US dollar trend, which directly determines the direction of USD/RMB movement. Lastly, official guidance on the exchange rate is also very important; the People's Bank of China’s adjustments to the midpoint quoting mechanism have a noticeable short-term impact on the exchange rate.

Honestly, there are indeed opportunities now for investing in RMB-related currencies, but timing is crucial. In the short term, the RMB is expected to remain relatively strong, but the possibility of a rapid appreciation below 7.0 is not very high. Going forward, close attention should be paid to the US dollar index trend, signals from the RMB midpoint rate adjustments, and China’s policies to stabilize growth. As long as these core factors are well grasped, the forecast for USD/RMB can become clearer.