Onshore RMB/USD Rate Hits 3.5-Year High: Where Does It Go From Here?

On August 10, the onshore RMB/USD closing rate stood at 6.7442, up 59 pips from the previous trading day and marking the highest level since February 2, 2023.

On the central parity rate front, the RMB/USD reference rate was raised by 20 basis points to 6.7884 on August 10, the strongest level since February 10, 2023.

Wen Bin, chief economist of China Minsheng Bank, told Jiemian News that the main driver of RMB strength so far this year has been robust export performance. With the ongoing optimization of the trade structure, the high growth rate of exports is expected to continue, and the trade surplus is likely to remain at elevated levels.

"China's economy has demonstrated strong resilience amid a complex and evolving external environment and the domestic transition between old and new growth drivers. The foreign exchange market has also been operating in a stable manner, laying a solid foundation for the RMB exchange rate to remain basically stable at a reasonable and equilibrium level. We expect the RMB exchange rate to maintain a stable two-way fluctuation pattern around 6.75 in August," Wen said.

Wang Qing, chief macro analyst of Golden Credit Rating, told Jiemian News that given the gradual drag of Middle East conflicts on the global economy, uncertainties remain in China's external trade environment going forward, and the sustainability of the AI investment boom remains to be seen. Combined with the fact that the U.S. dollar index is expected to maintain its relative stability since the beginning of the year, in the second half of the year the RMB is likely to move broadly opposite to the dollar with relatively small volatility. The probability of a repeat of the relatively rapid appreciation seen in the first half is low, with the exchange rate tending to stay in a two-way fluctuation range. The projected range is 6.7 to 7.0. Overall, the RMB exchange rate trajectory for the full year is likely to be "appreciating first, then stabilizing."

Huaxi Securities noted in a research report that a sizable trade surplus is expected to continue, corporate and household FX settlement willingness will keep being released, expectations for the Fed's rate path are becoming clearer, domestic monetary policy expectations remain stable, China-U.S. interest rate differentials will hold at relatively stable levels, RMB internationalization will continue to advance, and international demand for the RMB will continue to grow. The medium-term RMB remains in an appreciation channel, with the short-term RMB/USD rate moving toward 6.7.

Liu Tao, senior researcher at the International Finance Research Institute of the Chief Economists Forum China, told Jiemian News that during the "15th Five-Year Plan" period and beyond, the RMB is likely to face a structurally appreciating trend.

Liu believes that over the next five years, based on market supply and demand, the RMB may appreciate moderately against the U.S. dollar amid fluctuations. The 2026 USD/RMB central parity rate may fluctuate within the 6.6-7.0 range; offshore RMB fluctuations may have a wider range, generally showing a pattern of "two-way fluctuations with moderate strength."

The People's Bank of China held its 2026 second-half work conference on August 1, summarizing work since the beginning of 2026, analyzing the current situation, and arranging the next phase of work. At the work conference, the central bank specifically mentioned that it would continue to implement and supervise interest rate policy. It would uphold the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, strengthen expectations guidance, and keep the RMB exchange rate basically stable at a reasonable and equilibrium level.

The State Administration of Foreign Exchange stated at a recent 2026 second-half FX management work exchange meeting that since the beginning of 2026, China's foreign exchange market has demonstrated strong vitality and resilience amid complex conditions, with the RMB exchange rate floating in two directions and rising steadily overall, while cross-border capital has maintained net inflows.

Regarding key priorities for FX management in the second half of 2026, the meeting proposed building a strong buffer and breakwater against external shocks. It will strengthen monitoring of cross-border capital flows, continuously improve macro-prudential management and expectations management, and adopt a comprehensive approach to maintain stability in the foreign exchange market.