The RMB exchange rate breaks new high! The Federal Reserve's interest rate cuts accelerate the internationalization process, and it is expected to rise to 7 yuan by the end of the year.

Recently, the Chinese Renminbi (RMB) has been steadily strengthening against the US dollar. This trend is driven both by external factors, such as the Federal Reserve’s gradual rate cuts, and by China’s strategic efforts to promote the internationalization of the RMB.

As of November 26, the onshore USD/CNY exchange rate fell to 7.0824, and the offshore USD/CNH exchange rate dropped to 7.0779, both hitting over one-year lows. The CFETS RMB Exchange Rate Index rose to 98.22 on November 21, reaching its highest level since April this year.

Clear Central Bank Policy Guidance, RMB Appreciation as a Set Direction

Recent actions by the People’s Bank of China (PBOC) reveal a clear policy intent. The central bank sets a daily midpoint rate and allows the spot exchange rate to fluctuate within a 2% band around this midpoint, continuously guiding the exchange rate upward. Meanwhile, state-owned banks frequently buy US dollars to control volatility, ensuring a smooth and orderly RMB appreciation process.

The deeper implication of this approach is to build international confidence. As Kelvin Lam, senior economist at Pantheon Macroeconomics, pointed out, China seems to be enhancing its international credibility by demonstrating the stability of the RMB—similar to its strategy during the 1998 Asian financial crisis, when the RMB refused to engage in competitive devaluation and reinforced its regional anchor currency status.

Data Confirm the Significance of Appreciation, Accelerating Internationalization Takes Shape

Compared to 2018, when the RMB depreciated by about 5% due to trade tensions, the nearly 3% appreciation in 2025 presents a stark contrast. Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that showcasing the RMB’s strength and stability in complex market conditions is a powerful support for its internationalization.

Data from the Bank for International Settlements (BIS) more directly reflect this trend: since the last survey in 2022, the average daily trading volume of USD/RMB has increased by nearly 60%, reaching $781 billion, accounting for over 8% of total global daily foreign exchange trading. This indicates a significant increase in the RMB’s activity in the international currency market.

Goldman Sachs Forecasts Further Appreciation, Internationalization as a Policy Focus

Based on current assessments, Goldman Sachs analysts expect the USD/RMB exchange rate to further strengthen to around 7 by the end of the year, and potentially to 6.85 by 2026.

“We believe that RMB internationalization has become a core policy priority for the Chinese government, and this process is likely to accelerate significantly in the coming years,” said Goldman Sachs analysts. This means that RMB appreciation is not just a short-term market phenomenon but also reflects a long-term strategic shift.

Driven by the Fed’s ongoing rate cuts and China’s accelerated efforts to internationalize the RMB, the space for RMB appreciation continues to expand.