Will the USD to RMB exchange rate rise again in 2026? Several investment banks have given their answers. Now is a good time to buy the dip.

Will the RMB continue to depreciate, and for how long? This is the most concerned question among investors recently.

The RMB has indeed appreciated quite rapidly in 2025. From initially depreciating to around 7.4 at the beginning of the year, to the USD/RMB hitting a nearly one-year high close to 7.08 at the end of November, and then recently breaking below 7.0 again. This market movement has left many puzzled—should I buy or not?

Is the RMB really going to turn around?

It’s a bit ironic. From 2022 to 2024, the RMB against the USD has been falling. Aggressive rate hikes by the Federal Reserve, soaring dollar index, and the RMB staying under pressure above 7 became the norm. Real estate crisis, weak domestic demand, coupled with sustained high U.S. interest rates, made the RMB feel like an invisible hand was holding down a balloon.

But now, things have changed. International investment banks like Deutsche Bank, Morgan Stanley, and Goldman Sachs are signaling: The RMB depreciation cycle may have ended, and 2026 could even see a new round of appreciation.

Goldman Sachs’s view is the most aggressive. They directly state that the RMB is undervalued by 15% against the USD, and in the next 12 months, USD/RMB could rise to 7.0, possibly approaching 7.2 within three months. Deutsche Bank is even more optimistic, predicting that by the end of 2026, the RMB/USD exchange rate could fall to 6.7.

What’s the logic behind this? Simply put, three points:

First, China’s exports are still resilient. Although domestic demand is weak, export strength provides solid support for the RMB.

Second, the dollar is set to weaken. The Fed has started a rate cut cycle, and the dollar index has retreated from high levels, with a cumulative drop of 9% in the first five months of this year.

Third, foreign capital is returning. After several years of fleeing, global investors are beginning to reallocate RMB assets.

RMB exchange rate review over 5 years: where we come from and where we are headed

In 2020, the RMB appreciated sharply—by the end of the year, it reached 6.5, a 6% annual appreciation. At that time, the Fed cut rates to near zero, and the USD was extremely weak.

In 2021, it was even stronger—fluctuating narrowly between 6.35 and 6.58 throughout the year, marking the strongest period for the RMB in recent years.

2022 reversed course—dropping from 6.35 to 7.25, an 8% depreciation for the year, the largest decline in recent years. The Fed’s rate hikes, China’s pandemic control policies dragging down the economy, and multiple pressures stacked together.

2023 continued to fluctuate—bouncing between 6.83 and 7.35, with an average around 7.0, market confidence remained low.

In 2024, although the dollar weakened, the RMB didn’t perform well either—exchange rate rose from 7.1 to 7.3, with increased volatility.

In summary: whether the RMB appreciates or depreciates mainly depends on the USD index and policy differences between China and the US; in the short term, trade relations; in the medium term, economic fundamentals.

Three key factors influencing USD/RMB exchange rate trends in 2026

To forecast the 2026 trend, these three variables must be closely watched:

USD Index direction. This is the most direct factor. The Fed’s rate cuts in the next one or two years are a certainty, and the USD may continue to weaken. If the USD index drops to 89-90 (Morgan Stanley’s forecast), the RMB/USD could hover around 7.0-7.05. Conversely, if inflation stalls the rate cuts, the dollar rebounds, and the RMB will be under pressure.

US-China negotiations. When trade tensions start, the RMB depreciates; when negotiations ease, it appreciates. This cycle has repeated multiple times from 2022 to now, indicating the market is highly sensitive to policy expectations. If US-China relations continue to improve in 2026, the RMB will have more room to rise.

The stance of China’s central bank. Will the People’s Bank of China keep easing monetary policy? If rate cuts and reserve requirement ratio reductions continue, the short-term pressure on the RMB will persist; but if easing is combined with strong fiscal stimulus to stabilize the economy, it will be a long-term positive for the RMB. The key is whether the central bank is secretly adjusting the midpoint of the exchange rate—this “benchmark” often reveals the official’s true intentions.

Is it profitable to buy RMB-related currency pairs now?

Simply put: Yes, but timing is crucial.

In the short term, the RMB is expected to remain relatively strong, but rapid appreciation below 7.0 is unlikely. The real opportunity lies in trading within ranges—consider shorting the USD and going long on the RMB when the USD index is high, and vice versa.

The most important thing is to learn how to judge from these angles:

Monitor central bank policies— If rate cuts and reserve requirement reductions are clearly announced, the RMB will face short-term pressure; but if economic data stabilizes, long-term appreciation is still possible.

Watch economic data— GDP, PMI, CPI, fixed asset investment—these are the thermometers reflecting China’s economic health. Improving data will attract foreign capital inflows, naturally boosting demand for the RMB.

Follow Fed movements— Every Federal Reserve meeting is a turning point for the dollar. Confirmed rate cuts beyond expectations usually weaken the dollar; inflation data that disappoints will lead to a dollar rebound.

Observe official signals— How the RMB midpoint is set, whether the counter-cyclical factor is adjusted—these details reveal the central bank’s true intentions.

How can ordinary investors participate?

The most direct way is through forex margin trading platforms. Compared to banks and futures, these platforms have clear advantages:

• Ability to trade both ways, profit from falling or rising markets
• Support for small deposits, opening accounts with as little as $50
• Low trading costs, no commissions
• Flexible leverage, adjustable from 1 to 200 times, but risk is on you
• Risk management tools like take profit, stop loss, and trailing stop

Of course, securities firms and futures exchanges can also be used, but liquidity and trading hours are less convenient than forex platforms.

Summary

The main trend for USD/RMB in 2026 should be appreciation (RMB strengthening). The logic is clear: the dollar has peaked, the RMB is undervalued, and China’s export resilience is strong. But this process won’t happen overnight.

What investors really need to do is:

• Avoid blindly chasing highs or lows; focus on macro environment
• Keep an eye on central bank and Fed policy movements and economic data
• Learn to trade within the 7.0-7.4 range, rather than betting on a single direction
• Risk management always comes first

Final words: The forex market is complex, data is transparent, trading volume is huge, and it’s relatively fair for retail investors. As long as you grasp the big picture and implement good risk management, there are plenty of opportunities to profit from the RMB appreciation cycle in 2026.