The RMB appreciation accelerates! Goldman Sachs predicts that by 2026, USD/RMB will reach 6.85, with internationalization becoming a policy focus.

The US dollar remains under pressure, while the RMB reaches a new high in over a year

The advancement of the Federal Reserve’s rate cut cycle is reshaping the foreign exchange market landscape. Latest data shows that the USD/CNH (offshore RMB) has fallen to 7.0779, and the USD/CNY (onshore RMB) has also declined to 7.0824, both hitting near a one-and-a-half-year low.

More notably, the CFETS RMB Exchange Rate Index rose to 98.22 on November 21, marking the highest level since April this year. Behind these figures reflects a significant appreciation of the RMB against the US dollar and a basket of currencies.

Policy driver: Central bank actively guides appreciation expectations

The RMB’s appreciation is not solely driven by a weakening US dollar. The daily midpoint setting by the People’s Bank of China, which establishes a ±2% fluctuation band, is consciously guiding the exchange rate upward. Meanwhile, state-owned banks frequently buy US dollars, taking concrete actions to stabilize the appreciation and prevent sharp fluctuations.

There are deeper considerations behind this policy combination. Kelvin Lam, senior economist at Pantheon Macroeconomics, pointed out that from a strategic perspective, Chinese authorities seem to be using the RMB’s stable performance to establish international credibility, reminiscent of the efforts during the 1998 Asian financial crisis when the RMB maintained its value and protected regional peg currencies.

Accelerated internationalization: trading volume growth witness

The momentum of RMB internationalization is being unleashed. The latest survey from the Bank for International Settlements shows that compared to the last statistics in 2022, the daily trading volume of USD/RMB has increased by nearly 60%, reaching $781 billion, accounting for over 8% of the total global foreign exchange daily trading volume. This increase indicates a clear expansion in international market demand for trading RMB.

Kiyong Seong, Chief Asia Macro Strategist at Société Générale, believes that amid increasing global market volatility, the strength and resilience demonstrated by the RMB are strong evidence of its rising international status.

Comparison cycle: appreciation or depreciation?

Numbers best illustrate the issue. In 2018, under the impact of the US trade war, the RMB experienced about 5% depreciation pressure. By 2025, the RMB has appreciated by nearly 3%. From the opposite perspective, this reflects a fundamental shift in policy orientation—from passively responding to depreciation pressures to actively embracing appreciation opportunities.

Goldman Sachs forecast: heading to 6.85 next year

Goldman Sachs’ analysis team, based on current policy directions and economic fundamentals, provides a specific forecast: by the end of the year, the USD/RMB exchange rate is expected to reach the 7.0 level, and by mid-2026, it will further rise to 6.85.

The underlying logic of these forecasts is that RMB internationalization has become a key policy focus for the Chinese government, and this process is expected to accelerate significantly in the coming years. The appreciation channel for USD/RMB may be more clear than market previously anticipated.