Renminbi reaches new highs: internationalization accelerates, Goldman Sachs predicts record-breaking USD/CNY exchange rate

This round of Renminbi appreciation has come quite fiercely. As of November 26, the onshore USD/CNY has fallen to 7.0824, and the offshore USD/CNH has dropped to 7.0779, both hitting new lows in over a year. The CFETS Renminbi Exchange Rate Index also rose to 98.22 on November 21, marking the highest level since April this year.

The driving forces behind this are mainly from two aspects. On one hand, the Federal Reserve's rate cut cycle is gradually advancing, expanding the room for Renminbi appreciation. On the other hand, the People's Bank of China is actively guiding the process by setting higher daily midpoint rates and frequently buying US dollars through state-owned banks to stabilize exchange rate fluctuations, allowing the Renminbi to climb step by step.

From a strategic perspective, this is no coincidence. Kelvin Lam, senior economist at Pantheon Macroeconomics, pointed out that China seems to aim to establish international credibility through the stable image of the Renminbi — reminiscent of the measures during the 1998 Asian financial crisis, where the Renminbi refused to join the wave of competitive devaluation, thereby consolidating its regional anchor currency status.

In comparison, this shift is even more significant. During the US-China trade war in 2018, the Renminbi depreciated by about 5%, but by 2025, it has appreciated nearly 3% — a transition from passive response to active offense, indicating a change in China's monetary policy approach.

The progress of Renminbi internationalization is also validated by data. According to the Bank for International Settlements, since the last survey in 2022, the daily average trading volume of USD/CNY has increased by nearly 60%, reaching 7.81 trillion USD, accounting for over 8% of the total daily global foreign exchange trading volume — demonstrating that the Renminbi is playing an increasingly important role on the international stage.

Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that demonstrating the Renminbi's strength and stability in a complex market environment itself is strong evidence of the push for Renminbi internationalization.

What will happen next? Goldman Sachs analysts have provided specific predictions. Given the authorities' recognition of the Renminbi's strong trend, it is expected that the exchange rate will reach 1 USD to 7 RMB by the end of the year, and further appreciate to 6.85 in one year. Based on a comprehensive consideration of economic and non-economic factors, the internationalization of the Renminbi has become a key policy focus for the Chinese government, and it is expected to accelerate significantly in the coming years, writing a new chapter in the historical trend of USD/CNY exchange rate.