Behind the RMB hitting new highs: Central bank precise guidance, the USD-RMB pattern is about to be reshaped

The pace of RMB appreciation continues. As of the end of November, the onshore USD/RMB exchange rate fell to 7.0824, and the offshore RMB even dropped to 7.0779, both hitting lows not seen in over a year. How strong is this round of appreciation? The CFETS RMB Exchange Rate Index has risen to 98.22, reaching its highest point since April this year.

The Central Bank’s Silent Signal: The Big Strategy Behind Stable Exchange Rates

Rather than RMB appreciation being a natural occurrence, it is more like a carefully planned strategy. The People’s Bank of China’s daily midpoint setting mechanism—allowing the spot rate to fluctuate within a 2% band around the midpoint—is continuously guiding the exchange rate upward. Meanwhile, frequent dollar purchases by state-owned banks further stabilize this trend, resulting in a steady upward movement in USD/RMB trading.

From a deeper strategic perspective, this operation is not just about exchange rate adjustments. Kelvin Lam, senior economist at Pantheon Macroeconomics, points out that China is clearly using RMB stability to build international credibility. This approach is reminiscent of the 1998 Asian financial crisis—when the RMB chose not to devalue, thereby establishing itself as a regional anchor currency.

Real Market Reactions

The activity in USD/RMB trading is increasing. Data from the Bank for International Settlements shows that since the last statistics in 2022, the average daily trading volume of USD against RMB has grown by nearly 60%, now reaching $781 billion, accounting for over 8% of the total global foreign exchange daily trading volume.

Compared to the situation during the 2018 trade frictions, when RMB depreciated by about 5%, this has now reversed. The RMB has appreciated by nearly 3% in 2025. Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that demonstrating RMB strength amid market volatility actually lays a solid foundation for elevating RMB international status.

The Role of the Fed’s Rate Cuts Cannot Be Ignored

Another key driver of RMB appreciation is the policy shift by the Federal Reserve. As the Fed gradually proceeds with rate cuts, the pressure on the US dollar index has increased, opening up more room for RMB appreciation. In this macro environment, the relative value of the RMB is naturally on the rise.

Institutional Expectations: A New USD/RMB Equilibrium in 2026

Looking ahead, Goldman Sachs analysts have made clear predictions. They believe that, supported by the authorities’ continued backing of a stronger RMB, the exchange rate could reach 1 USD to 7 RMB by the end of the year, and further strengthen to 6.85 in a year.

Behind these forecasts lies a deeper judgment: RMB internationalization has become a core policy goal of the Chinese government. Goldman Sachs states that, considering both economic and non-economic factors, they believe the rapid acceleration of RMB international status will occur in the coming years. This not only signifies numerical changes in USD/RMB exchange rates but also symbolizes China’s structural rise in influence within the international financial landscape.