Is the internationalization of the RMB becoming a certainty? Goldman Sachs makes a bold prediction: by 2026, the USD to RMB exchange rate may reach 6.85

The recent appreciation trend of the RMB is unusual. According to Goldman Sachs’s latest analysis, the USD/RMB exchange rate is expected to reach the 7.00 level by the end of the year, and could even appreciate to 6.85 by 2026 — which means there is still considerable room for RMB appreciation.

The driving forces behind this are quite clear. On one hand, the Federal Reserve’s continued rate cuts have created an environment conducive to RMB appreciation; on the other hand, policy measures are actively promoting a gradual rise in the exchange rate. Data shows that the daily midpoint set by the central bank is steadily guiding the RMB to appreciate, and frequent purchases of USD by state-owned banks are also limiting depreciation pressures from the supply side. This combination of measures points very clearly — a stable RMB can help establish international credibility.

Current data supports this judgment. As of November 26, the onshore USD/CNY has fallen to 7.0824, and the offshore USD/CNH has fallen to 7.0779, both hitting new lows in over a year. Looking at the CFETS RMB Exchange Rate Index, it rose to 98.22 on November 21, the highest level since April this year.

Trading volume also reveals clues. Data from the Bank for International Settlements shows that since 2022, the daily trading volume of USD/RMB has increased by nearly 60%, now reaching $781 billion, accounting for over 8% of the total daily global foreign exchange trading volume. This indicates a significant increase in market participation.

Interestingly, this stable appreciation movement reminds people of the RMB’s performance during the Asian financial crisis in 1998 — when the RMB refused to join the devaluation race, ultimately solidifying its status as a regional anchor currency. Now, this logic seems to be being reused. Kelvin Lam, senior economist at Pantheon Macroeconomics, pointed out that from a strategic perspective, China clearly aims to build international credibility by demonstrating RMB stability.

Comparing to last year’s performance makes the significance clearer. In 2018, the RMB depreciated by about 5% under trade war pressures, but by 2025, it appreciated by nearly 3% — this contrast indicates a policy shift. Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that showing RMB strength amid market turbulence provides the best support for advancing RMB internationalization.

Goldman Sachs’s analysis framework is more straightforward: considering the policy recognition of the RMB’s strong trend, as well as the combined assessment of economic and non-economic factors, RMB internationalization has become a policy priority and is expected to accelerate significantly in the coming years. This suggests that the upward trend of USD/RMB may just be beginning.