Onshore and Offshore RMB Hit Highest Levels Against USD Since Mid-February 2023

Both onshore and offshore renminbi exchange rates against the US dollar simultaneously reached their highest levels in over three years.

On May 25, the onshore RMB spot rate broke through the 6.79 level at the open, rising as high as 6.7803 intraday — a gain of 0.2% — marking a fresh high since mid-February 2023.

The offshore RMB rate, which more closely reflects international investor sentiment, also strengthened. The offshore RMB touched 6.7800 against the dollar intraday on May 25, appreciating more than 0.2% from the previous trading day — likewise the highest since mid-February 2023.

The US Dollar Index fell on May 25, declining more than 0.3% intraday at time of publication.

China International Capital Corporation (CICC) noted in a research report that overall, the dollar's appreciation momentum may remain relatively moderate due to both internal and external constraints, while the RMB is expected to remain broadly stable, supported by strong foreign exchange market resilience. Last week the dollar index moved narrowly, with non-dollar currencies posting mixed results and the RMB edging up to strengthen against a basket of currencies. Externally, the dollar held roughly flat as US price data beat expectations and Iran-related geopolitical signals remained muted. Internally, steady demand for foreign exchange settlement continues to provide effective support for RMB demand. Market expectations are broadly skewed toward a mild RMB appreciation trend, with risk-reversal options and implied volatility indicators both trending lower. On the exchange rate stabilization policy front, the PBOC fixing has risen for four consecutive weeks with moderate changes, and the scale of counter-cyclical factor adjustments over the past two weeks has not changed significantly.