USD/CNY Enters 6.7 Range: How Middle East Tensions Are Shaping RMB Exchange Rate Outlook

Amid heightened global geopolitical turbulence, foreign exchange markets have seen notable volatility. The RMB/USD exchange rate has hit a phased new high, with the central parity rate maintaining an upward trend. During the North American trading session on May 11, the offshore RMB (CNH) broke through 6.79 against the dollar for the first time in three years intraday, rising more than 100 pips from the day's low. On May 12, the RMB/USD central parity rate was adjusted up 41 pips to 6.8426, setting a fresh three-year high.

As of press time, both onshore and offshore RMB/USD rates have cumulatively appreciated over 2,000 pips, representing a gain of approximately 3%. Industry institutions believe that while the RMB has upside momentum, significant further unilateral appreciation is limited, and the overall trend will remain one of steady, measured fluctuation.

Steady Advance Amid Geopolitical Volatility

Since May, the US dollar index has remained range-bound, while the RMB/USD exchange rate has shown clear strengthening. On May 7, the offshore RMB broke through the 6.8 level against the dollar for the first time since February 2023. During the Asian session on May 11, the onshore RMB briefly touched 6.79 intraday, its first such level in over three years; in the North American session, the offshore RMB broke 6.79 for the first time in three years.

CICC Foreign Exchange noted that from an external perspective, last week saw a marked improvement in navigation expectations for the Strait of Hormuz, oil prices retreated from late-April highs, and the dollar index edged lower, driving broad-based appreciation in non-dollar currencies. From a domestic perspective, in a weak-dollar environment, the central parity rate continued to be adjusted lower, while counter-cyclical factor adjustments remained at a relatively average level since April.

Huatai Securities pointed out that the offshore RMB/USD rate has twice broken through the 6.8 level, the first time in the current appreciation cycle. As the Middle East situation de-escalates somewhat, the RMB has returned to an appreciation channel, with multiple short-term catalysts supporting further RMB strengthening. Huatai maintained its forecast of an annualized RMB/USD appreciation of 4-5%, corresponding to a 12-month RMB/USD range of 6.4-6.5.

Orient Jincheng chief macro analyst Wang Qing noted that amid recent Middle East developments, global FX markets have seen significant volatility while the RMB has maintained a steady-to-strong trend. This reflects a strong macroeconomic start to the year, contained impact of Middle East tensions on China's economy, a stabilizing external trade environment, and notably accelerated export growth since early 2026.

Guarding Against Overshoot Risk

On April 28, the Political Bureau of the CPC Central Committee convened a meeting, reiterating for the first time in a year the goal of maintaining the RMB exchange rate basically stable at a reasonable and balanced level.

On May 11, the People's Bank of China Governor Pan Gongsheng stated that the PBoC has the capacity and confidence to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and will counter pro-cyclical and unilateral behaviors.