Recently, the analysis of the RMB exchange rate trend has become a hot topic in the market, especially since the second half of last year, when the RMB's appreciation wave indeed caught many people's attention.

Speaking of which, the RMB hasn't had an easy few years either. Starting from 2022, it depreciated for three consecutive years, with the USD to RMB exchange rate once surging above 7.3, causing many to be pessimistic about the RMB. But by the second half of 2025, the situation began to reverse, and the RMB stubbornly broke through the psychological barrier of 7.0, entering this year with continued strength, even reaching a level of 6.81 at one point, hitting a nearly three-year high.

Why has this shift occurred? I’ve summarized that it’s mainly driven by three forces: first, China’s exports are really strong; last year, the trade surplus hit a record high of 1.2 trillion USD, bringing in a large amount of foreign exchange demand; second, the US dollar index has continued to weaken, falling from over 109 at the start of the year to around 98 now, providing room for the RMB to appreciate; third, foreign capital has started to flow back, with interest in Chinese assets clearly warming.

However, this wave of appreciation is not without obstacles. During the few trading days after the Spring Festival, the RMB indeed surged sharply, rising nearly 600 points in just three days, with market sentiment leaning strongly bullish. But the central bank also noticed this and announced at the end of February a reduction in the foreign exchange risk reserve ratio, which clearly indicates—officials do not want the exchange rate to appreciate excessively unilaterally. This indirectly reflects the complexity of RMB exchange rate analysis; it’s not just about market supply and demand, but policy orientation is also crucial.

Regarding policies, the central bank influences the exchange rate through interest rate adjustments, foreign exchange interventions, and liquidity management. This combination has a profound impact on the RMB trend. Plus, the daily published midpoint rate by the People’s Bank of China also acts as a “benchmark,” playing a very important role in stabilizing the exchange rate. Historically, when the central bank launched a loosening cycle in 2014, the RMB appreciated from 6 to 7.4, demonstrating the power of monetary policy.

Currently, China’s economy is steadily recovering, with GDP growth of 5.0% in the first quarter, exceeding expectations and reversing the lows at the end of last year, indicating ongoing structural optimization. Although the US dollar temporarily rebounded due to Middle East tensions, it is now weakening again. The US-Iran agreement is still undecided, and the dollar index is fluctuating narrowly around 98.

As for the future of RMB exchange rate analysis, major institutions like Goldman Sachs and HSBC are quite optimistic. Goldman Sachs maintains a target of 6.70, believing the RMB is still about 22% undervalued; HSBC sets its year-end target at 6.75. But I personally think that in the short term, the RMB is unlikely to continue rising unilaterally. The central bank’s signals of cooling are already clear, and with the second quarter typically being a peak period for corporate forex purchases, the exchange rate is more likely to fluctuate within a range, estimated between 6.83 and 6.92, with even the possibility of slight retracements.

For investors with long-term holding needs or those looking to hedge against USD risk, there is indeed some value in current allocations. But blindly chasing highs is unwise; a phased approach with proper stop-loss and take-profit strategies is recommended, along with close attention to the central bank’s midpoint rate and subsequent trade data.

To judge the future trend of RMB exchange rate analysis, I believe the core still depends on four directions: first, the monetary policy stance of the central bank, which directly affects money supply; second, China’s economic data—GDP, PMI, CPI—these indicators reflect economic vitality and influence foreign capital inflows; third, the US dollar trend, as Federal Reserve policies are often key; fourth, the official stance on the exchange rate, since the RMB has a special midpoint mechanism, and policy guidance cannot be underestimated.

Looking at a five-year trend reveals patterns. During the pandemic, the RMB appreciated significantly; from 2020 to 2022, it mostly stayed below 7. During the post-pandemic period, it depreciated for three years until last year when it re-entered an appreciation channel. If this trend continues, based on historical similar cycles, it could last a long time—possibly ten years. Although there will be short-term fluctuations due to dollar volatility and geopolitical events, the overall direction should still be upward.

Offshore RMB (CNH) performance is even more worth noting because it trades more freely in international markets, with larger volatility, better reflecting global market sentiment. As of early May, CNH fluctuated between 6.82 and 6.95, appreciating over 1,400 basis points since the start of the year, also hitting a near three-year high. This indicates that market confidence in the RMB is indeed recovering.

In summary, the logic behind RMB exchange rate analysis remains relatively clear. As long as these macro factors are grasped, the general direction can be judged. The forex market has huge trading volume, allows for two-way trading, and the data is transparent and publicly available, making it relatively fair for investors. Now is not the time for blindly chasing highs, but neither should one completely miss opportunities. A phased approach with risk control is the right way.