Recently, I noticed a pretty interesting phenomenon—the Renminbi’s appreciation rally is really coming both suddenly and ferociously. After it broke 7.0 at the end of last year, this year’s start has been completely unstoppable, and it even surged to 6.81, setting a new high in nearly three years.

To be honest, the logic behind this rally is fairly solid. China’s exports have shown strong resilience; last year, the trade surplus hit a historical high of $1.2 trillion, up 20%. This figure is comparable to the GDP scale of one of the world’s top 20 economies. And into this year, this momentum has continued: in the first quarter, GDP grew 5.0% year on year, exceeding market expectations. On top of that, foreign capital has continued to reallocate Renminbi assets, capital inflows are warming up, and market confidence in the Renminbi is indeed increasing.

However, it’s also worth noting that at the end of February, the central bank cut the risk reserve ratio for foreign exchange forward contracts from 20% to 0%. This move sends a clear signal that the authorities do not want the exchange rate to appreciate excessively in a one-sided way. In the short term, the Renminbi’s appreciation pace may slow down a bit; the higher probability is that it will trade in a range between 6.83 and 6.92.

From a medium- to long-term perspective, the factors that support strengthening the Renminbi still exist. The U.S. dollar index is currently hovering narrowly between 98.0 and 98.5 and is showing a generally weaker pattern. As long as the Federal Reserve continues to cut interest rates or U.S.-China relations ease, the dollar will be hard to rebound effectively. At the same time, China’s economic fundamentals continue to release positive signals, and the Renminbi internationalization process is steadily advancing. The proportion of trade settlements using the Renminbi is increasing year by year, and all of these provide long-term support for the currency.

Goldman Sachs maintains its forecast that the Renminbi will reach a target price of 6.70 over the next 12 months, believing there is still about 22% upside potential that is undervaluation-driven. HSBC, meanwhile, sets its year-end target at 6.75. Multiple international investment banks are optimistic about the Renminbi’s outlook, generally believing there is a chance to further test the 6.70 to 6.75 range.

My personal view is that, at this stage, there is indeed some thematic support for positioning in the Renminbi. For people who need long-term holdings or want to hedge against U.S. dollar risk, phased positioning is a more rational approach. But you also need to recognize that, in the short term, it’s unlikely to keep rallying upward in a one-way fashion. Seasonal factors (such as higher corporate forex purchasing demand in the second quarter) and central bank policy adjustments will all affect the exchange-rate trajectory.

The operational suggestion is to set take-profit and stop-loss levels properly, and closely monitor the central bank’s daily released midpoint rates and the subsequent release of trade data. The long-term trend of Renminbi internationalization has not changed, but in the short term you need patience—don’t blindly chase the highs. Looking back at the past five years, the Renminbi has gone through periods of appreciating and depreciating: it stayed strong in 2021, depreciated sharply by 8% in 2022, faced pressure in 2023, and saw rising volatility in 2024; it only formally ended the three-year depreciation cycle in 2025. How far this appreciation can go still depends on three core factors: the U.S. dollar’s trend, China’s economic performance, and central bank policy.

In short, Renminbi internationalization is a long-term process, and short-term fluctuations are inevitable. But as long as China’s economic fundamentals don’t run into problems, foreign investors’ interest in Renminbi assets won’t fade. Whether to buy now mainly depends on your risk tolerance and your investment time horizon.