RMB Nears Breaking 7: Can USD/CNY Reach 6.5 Next Year?

The Chinese yuan (RMB) has continued to strengthen in recent weeks, bringing the psychologically important 7.0 USD/CNY level within reach. On December 24, 2025, the offshore RMB briefly surged past 7.00, marking its strongest level in 14 months and reigniting market debate over how far the currency can rise in the coming years.

RMB Breaks Higher: Key Market Data

Offshore RMB (CNH) touched 7.0013 against the US dollar
Onshore RMB (CNY) strengthened to 7.0125
Year-to-date (2025): RMB has appreciated 4.57% against the USD
US Dollar Index (DXY) is down 9.78% this year
Other major currencies such as the euro and British pound have also posted significant gains against the dollar

These movements underscore a broad-based weakening of the US dollar and a notable re-rating of non-USD currencies.

What Is Driving RMB Appreciation?

1. External Factors: Weaker Dollar and Capital Flows into Non-USD Assets

The US Federal Reserve has cut interest rates three times in 2025, reducing the yield advantage of dollar assets and weakening confidence in the dollar’s long-term strength.

As global liquidity conditions ease, international capital has increasingly flowed into non-US markets in search of diversification and higher returns. This trend has provided strong external support for RMB appreciation.

2. Domestic Fundamentals: Trade Surplus and Improving Economic Data

Record Trade Surplus

China’s trade surplus exceeded USD 1 trillion in the first 11 months of 2025, ensuring ample foreign exchange supply. Exporters’ increased willingness to convert foreign currency earnings into RMB has further supported the exchange rate.

Economic Recovery Signals

Better-than-expected macroeconomic data has strengthened confidence in China’s economic outlook. Consumption stimulus measures, such as trade-in programs, have shown tangible effects, while export performance toward year-end remained resilient. Rising policy support expectations have also helped stabilize market sentiment toward the yuan.

Market Impact of a Stronger RMB

Beneficiaries

Lower FX Costs for Education and Travel
A stronger RMB significantly reduces the cost of overseas spending. For example, exchanging USD 100,000 now costs approximately RMB 17,000 less than mid-year, easing financial pressure for students and outbound travelers.

Lower Import Costs for Businesses
Import-dependent companies benefit from reduced RMB-denominated costs for raw materials and equipment, improving margins and competitiveness.

Areas Under Pressure

Exporters Face Margin Compression
RMB appreciation raises the foreign-currency price of Chinese exports, potentially weakening price competitiveness and squeezing exporter profits.

Losses on USD Assets
Investors holding US dollar deposits or US Treasury bonds may experience valuation losses when returns are converted back into RMB.

RMB Outlook: Can the Yuan Reach 6.5 or Even 6.0?

Short-Term Outlook: High Probability of “Breaking 7,” Stability Uncertain

In the near term, most analysts agree that breaking below 7.0 is highly likely, given current momentum. However, whether the RMB can firmly hold below 7.0 depends on several factors:

Future movements of the US dollar
The PBOC’s daily midpoint guidance
The strength and timing of domestic growth-support policies

Medium- to Long-Term Outlook: Gradual Appreciation with Diverging Views

Mainstream Forecast: Moderate Appreciation
Most institutions expect a gradual strengthening trend rather than a sharp rally.
According to Deutsche Bank, USD/CNY could reach 6.7 by the end of 2026 and further strengthen to 6.5 by the end of 2027, driven by stronger exporter FX conversion and improving economic fundamentals.

More Optimistic View
Huang Qifan, former mayor of Chongqing, has suggested that over the next decade, the RMB could appreciate toward 6.0, reflecting China’s manufacturing strength and rising global currency status. This scenario, however, remains subject to global uncertainties.

Regulatory Stance
Chinese regulators continue to emphasize a managed, two-way fluctuation regime. The PBOC uses tools such as midpoint guidance and swap market adjustments to prevent excessive one-way speculation and maintain currency stability.

Expert Opinions

Zhao Qingming, Vice President of the Institute of Foreign Exchange Studies:
RMB strength is driven by both a weaker dollar and China’s record trade surplus. The yuan is expected to remain stable to stronger next year.
Wang Qing, Chief Macro Analyst at Orient Securities:
RMB will likely stay strong in the short term, with close attention needed on USD trends, policy intensity, and midpoint management.
CITIC Securities:
Once appreciation expectations form, overseas capital inflows can create a positive feedback loop. As the currency of the world’s largest manufacturing and commodity-consuming economy, RMB’s intrinsic value may continue to be re-evaluated upward.

Investment Implications and Strategy

Investors should gradually adapt asset allocation strategies to a stronger RMB environment, focusing on three key drivers:

Short-term sentiment and positioning effects
Profit margin changes for exporters and importers
Policy-driven sector opportunities

Special attention should be paid to industries sensitive to FX movements, including export manufacturing, imports, education, tourism, and overseas consumption.

Kesimpulan

The recent appreciation of the RMB reflects a combination of external dollar weakness and solid domestic fundamentals. While the yuan is likely to break below 7.0 in the short term, its medium- and long-term trajectory remains subject to global monetary policy, economic recovery strength, and regulatory guidance.

A move toward 6.5 is plausible over the next few years, but investors should remain cautious, closely monitor policy signals, and manage currency risk proactively in an environment of ongoing exchange rate volatility.

Pertanyaan yang Sering Diajukan

1. Will the RMB break below 7 against the US dollar?

Yes. Most analysts believe the RMB has a high probability of breaking below 7.0 in the short term, supported by a weaker US dollar, strong trade surplus, and improving domestic fundamentals. However, whether it can remain firmly below 7 depends on policy guidance and global market conditions.

2.Why is the Chinese yuan strengthening in 2025?

The RMB is strengthening due to:

Multiple US Federal Reserve rate cuts, weakening the dollar
Record-high trade surplus providing strong FX supply
Improved economic data and policy support expectations
Increased capital inflows into non-US assets

3.Can USD/CNY reach 6.5 in the next few years?

Many institutions believe it is possible. Deutsche Bank forecasts USD/CNY could reach 6.7 by 2026 dan 6.5 by 2027, assuming steady economic recovery and sustained exporter FX conversion. However, appreciation is expected to be gradual, not linear.

4.Is it possible for the RMB to rise to 6.0?

In the long term, some experts believe it is possible. Former Chongqing mayor Huang Qifan suggested RMB could appreciate toward 6.0 over the next decade, reflecting China’s manufacturing strength and global economic role. This remains a long-term scenario with uncertainties.

5.Who benefits from a stronger RMB?

Students and outbound travelers, due to lower exchange costs
Importers, benefiting from cheaper raw materials and equipment
Companies with USD-denominated liabilities

6.Who is negatively affected by RMB appreciation?

Export-oriented manufacturers, facing margin pressure
Investors holding USD deposits or US Treasury bonds, due to FX losses when converted into RMB

7.Will regulators allow one-way RMB appreciation?

No. Chinese regulators emphasize a managed, two-way fluctuation policy. The PBOC uses midpoint guidance and derivative market tools to prevent excessive one-way speculation and maintain currency stability.