Recently looked at the RMB trend analysis and found quite a few noteworthy changes. The recent appreciation of the RMB is indeed quite interesting; from breaking 7 at the end of last year to now, the upward momentum has been quite strong.

I’ve noticed a few key points. First is the trade data. China’s trade surplus hit a record high last year, reaching about 1.2 trillion USD, a 20% increase compared to the year before, and this scale is comparable to the GDP of one of the top 20 economies globally. Moving into this year, this momentum continues, with Q1 GDP growing 5.0% year-on-year, exceeding market expectations. This economic fundamental support naturally attracts foreign capital inflows, pushing the RMB stronger.

The central bank also has new moves. At the end of February, they lowered the foreign exchange risk reserve ratio from 20% to 0%, aiming to encourage enterprises to purchase foreign exchange and slow down the RMB’s appreciation pace. This indicates that the authorities actually don’t want the exchange rate to rise too quickly, considering export competitiveness. So in the short term, the RMB’s appreciation pace might slow slightly, with a higher probability of oscillating between 6.82 and 6.95.

From the dollar perspective, the USD index is currently fluctuating narrowly between 98.0 and 98.5, still relatively weak overall. But the appreciation of the RMB this time actually exceeded the dollar’s decline, especially since mid-March when Middle East tensions shifted, the dollar strengthened against most currencies, yet the RMB hit a near three-year high against the dollar, indicating that China’s economic fundamentals are providing strong support.

Market institutions are also quite optimistic. Goldman Sachs maintains a target of 6.70, believing the RMB is still about 22% undervalued; HSBC sets a year-end target of 6.75. Several investment banks expect the RMB to further test the 6.70 to 6.75 levels.

But I think there are a few points to watch. First, the central bank’s policy adjustments will continue to influence short-term trends; second, the second quarter is usually a period of higher corporate foreign exchange purchase demand, which can put pressure on the exchange rate. So if you’re planning to position in RMB, I’d suggest a phased approach and avoid blindly chasing the high. For those with long-term holding needs or wanting to hedge against USD risk, current levels do have some allocation value.

Overall, the logic behind the RMB trend analysis remains quite clear: as long as the USD’s credibility isn’t restored and China’s economic fundamentals continue to send positive signals, the RMB’s upward momentum may persist. But in the short term, it’s unlikely to surge unilaterally; more likely, it will oscillate within a certain range. Keeping a close eye on the central bank’s midpoint rate and upcoming economic data will be very helpful in judging the future trend.