The RMB is expected to see a strong appreciation in 2025, and a steady appreciation in 2026!

Recently, the onshore and offshore Renminbi (RMB) against the US dollar has been fluctuating around the 7.0 mark, showing a clear upward trend. In 2025, the RMB followed a curve of "initially suppressed and then rising". It rose from the intra-annual low of 7.35 on April 9 to 7.01 on December 26, with a cumulative increase of 4.6% for the whole year, ending on a strong note. Experts predict that the RMB is expected to appreciate steadily in 2026.

From the beginning of 2025 to early April, the Renminbi (RMB) experienced pressure and weakened, primarily due to the impact of the US "reciprocal tariff" policy. Affected by the escalation of US tariffs, market sentiment fluctuated, and the exchange rate of RMB against the US dollar fell rapidly from 7.25 at the end of March, hitting an intraday low of 7.35 on April 9. At that time, the escalation of Sino-US economic and trade frictions, coupled with the spread of global risk aversion sentiment, put the RMB under temporary external pressure.

April 9 marked a turning point in the exchange rate for the entire year, with the RMB embarking on a robust appreciation path. This reversal was the result of a resonance of positive internal and external factors: externally, the continuous weakening of the US dollar index provided a favorable window. In 2025, market expectations for a weaker US economy and a rate cut by the Federal Reserve intensified, coupled with economic concerns triggered by US trade policies, leading to an increase in "de-dollarization". The US dollar index fell from around 110 points at the beginning of the year, which contributed to the passive strengthening of the RMB.

Internal factors further consolidate the foundation for appreciation: Firstly, China's economy is resilient and robust, with high export growth. At the end of the year, the demand for foreign exchange settlement from export enterprises is concentratedly released, and the expectation of appreciation enhances the willingness to settle foreign exchange, forming a positive cycle of "increased foreign exchange settlement - exchange rate appreciation". Secondly, after the September 26th Politburo meeting in 2024, the "technology revaluation bull" of A-shares was initiated, and the ChiNext index rose significantly, enhancing the attractiveness of Chinese assets. Foreign capital continued to flow in, supporting the exchange rate. In addition, the People's Bank of China guided the exchange rate through countercyclical factors and other tools, facilitating its reasonable and orderly appreciation.

By the end of 2025, the RMB exchange rate approached the 7.0 mark, serving as a "thermometer" for market sentiment and a sign of currency strength transition. The annual appreciation of 4.6% not only reflects market confidence in China's economic fundamentals but also mirrors changes in the global currency landscape. The strengthening of the exchange rate presents a "double-edged sword" effect on market entities: it benefits the import raw material industry by reducing costs and improving profits, while the export manufacturing industry needs to be vigilant about the potential impact on product price competitiveness.

Looking ahead to 2026, industry experts are generally optimistic, believing that the RMB is expected to appreciate steadily. Mingming from CITIC Securities pointed out that the US dollar index is likely to continue to weaken in 2026. Coupled with the support of China's economic fundamentals, the guidance of central bank policies, and the release of accumulated foreign exchange settlement demand, the RMB will appreciate moderately. Lu Zhe from Soochow Securities further predicted that if the US dollar continues to weaken, the RMB against the US dollar may rise to the range of 6.7-6.8 by the end of 2026.