USD/CNY Breaks Below 6.8! Onshore RMB Hits 39-Month High Against US Dollar

The RMB exchange rate against the US dollar broke through the 6.8 level in the onshore market.

On May 11, the USD/CNY spot exchange rate opened at 6.8000, then strengthened further to break below this threshold, touching a high of 6.7900, marking the first time since mid-February 2023 that the 6.80 level has been breached.

The offshore RMB (USD/CNH), which better reflects international investor expectations, also strengthened on May 11. As of the time of writing, the intraday high reached 6.7912, refreshing the high since mid-February 2023.

In terms of the central parity rate, on May 11, the RMB central parity rate against the US dollar was adjusted upward by 35 basis points to 6.8467.

The US Dollar Index (DXY) strengthened on May 11, reaching a high of 98.1055 as of the time of writing, with an intraday appreciation of over 0.2%.

On May 7, the offshore RMB (USD/CNH) broke below 6.8 for the first time in this appreciation cycle. On May 11, the onshore spot rate also broke through this threshold.

HTSC points out that in the short term, multiple catalysts are expected to further support RMB strength. Specifically: the US-Iran peace talks are progressing with twists and turns, but the objective is clearer, and the US dollar may weaken further; recently the Japanese government intervened in the foreign exchange market to promote yen appreciation, driving Asian currency strength, including RMB; China's exports have exploded on multiple fronts and continue to exceed expectations, combined with sustained foreign exchange inflows, which are expected to drive accelerated RMB appreciation.

Wang Qing, chief macro analyst at Dongfang Jincheng, points out that overall, in the process of recent Middle East developments, global foreign exchange markets have shown significant volatility, while the RMB trend has been stable with a bias toward strength. Behind this is the fact that the economy got off to a strong start this year, the impact of the Middle East situation on China's economy is controllable, and the current external economic and trade environment has stabilized, with export growth significantly accelerating since the beginning of the year. All of these provide important support for the RMB exchange rate. The current tension in the Middle East shows signs of cooling, but there may still be variables later, which will remain the dominant factor driving the US dollar trend. Global currency markets will remain in a high-volatility state. Going forward, the RMB exchange rate will be primarily stable, generally maintaining an operating pattern of reverse fluctuation against the US dollar with relatively small fluctuation margins. Considering that the recovery momentum of China's external economic and trade environment is expected to continue, exports will maintain relatively fast growth overall, and the RMB is highly likely to continue its stable-to-strong trend amid significant fluctuations in the US dollar index.