Will the RMB continue to rise after reaching a yearly high? Goldman Sachs predicts it will break the 7-level barrier by 2026.

Recently, discussions about the USD/CNY exchange rate have heated up again. Goldman Sachs’s latest research report makes a bold prediction: supported by a series of policies, the RMB is expected to continue appreciating next year, with an exchange rate target of 6.85 yuan/USD. What exactly is happening behind the scenes?

RMB Appreciation Trend Is a Done Deal

The data is in front of us, showing how strong this appreciation cycle has been. By the end of November, the onshore USD/CNY had fallen to 7.0824, and the offshore USD/CNH had dropped to 7.0779, both hitting lows not seen in over a year. The CFETS RMB index, which measures the currency’s performance against a basket of currencies, surged to 98.22, reaching its strongest level since April this year.

This is not a fleeting phenomenon. From the beginning of the year to now, the RMB has appreciated nearly 3% against the US dollar, forming a sustainable upward trend. In contrast, during the trade friction period in 2018, the RMB depreciated by 5%, highlighting a significant shift.

Deep Drivers of Appreciation: Dual Support from Policies and Cycles

Why is the RMB so strong? The reasons are not complicated. On one hand, the Federal Reserve’s rate cut cycle has sent signals, and the relative weakening of the dollar has created opportunities for emerging currencies. On the other hand, the People’s Bank of China (PBOC) is actively guiding the market—setting the daily midpoint rate consistently in an appreciation direction, giving the RMB a clear upward trading band. State-owned banks frequently buy US dollars, further stabilizing the exchange rate and ensuring a smooth appreciation process.

Behind this policy firmness lie deeper strategic considerations. As macroeconomic analysts point out, China seems to be deliberately demonstrating the stability of the RMB—similar to its approach during the Asian financial crisis in 1998—when the RMB refused to follow the trend of depreciation, thereby consolidating its status as a regional anchor currency. Although the operational methods have evolved, the underlying purpose remains consistent.

RMB’s Rising Status on the International Stage

The appreciation of the RMB has profound implications for the international financial system. Over the past three years since 2022, the daily trading volume of USD/CNY has increased by nearly 60%, reaching a scale of over $781 billion, accounting for more than 8% of global daily foreign exchange trading volume. What does this indicate? It shows that in turbulent market conditions, the RMB is earning the trust of international investors through tangible performance.

A strong, stable RMB image provides powerful support for its internationalization process. As more multinational companies and institutions choose to settle transactions in RMB, and as the RMB’s share in international reserves gradually increases, appreciation itself becomes a policy signal—telling the world that this is a trustworthy payment tool.

What Does Goldman Sachs Think: 6.85 Is the New Target Price

Goldman Sachs’s analysis team believes that, based on the combined effects of these economic and non-economic factors, RMB internationalization has become a policy priority for the Chinese government and will accelerate significantly in the coming years. Against this backdrop, their forecast is: by the end of the year, USD/CNY could reach the psychological threshold of 7.0, and in one year, further appreciate to 6.85.

In other words, this is not just a short-term technical rebound but a medium-term appreciation cycle. As long as policy support remains unchanged, there is still considerable room for the USD/CNY spread. For foreign exchange investors, what this forecast implies is self-evident.