On April 8, the onshore Chinese yuan (RMB) closed at 6.8274 against the US dollar, rising 323 basis points from the previous trading session. The offshore RMB briefly strengthened to 6.8215, both reaching their highest levels in nearly three years.
Market participants attribute the rapid appreciation primarily to a broad-based decline in the US dollar index, which fell by as much as 0.9%, hitting a four-week low. A decline in US Treasury yields following a ceasefire agreement further reduced the dollar’s appeal as a safe-haven currency.
According to Pang Ming, a senior researcher at the National Institution for Finance & Development, the dollar index lost momentum after its March highs. At the same time, easing geopolitical tensions in the Middle East weakened safe-haven demand for the US dollar, creating short-term room for RMB valuation recovery.
China Assets Increasingly Viewed as a “Safe Haven”
Multiple macro factors have contributed to the RMB’s recent strength.
Pang noted that the first driver is the “strong start” effect from China’s Q1 macroeconomic performance. Market expectations for stable economic growth have attracted short-term capital inflows, leading to a noticeable increase in demand for RMB-denominated assets.
The second factor is seasonal foreign exchange settlement demand from export-oriented enterprises. In April, many exporters complete first-quarter financial reporting and typically convert accumulated foreign currency earnings into RMB to improve cash flow.
Because the RMB previously traded at relatively lower levels, exporters built up significant settlement expectations. Once the exchange rate broke key thresholds, momentum-driven conversion flows accelerated, quickly absorbing US dollar liquidity and reinforcing RMB appreciation in the short term.
In addition, analysts noted that compared with other major currencies, the RMB has demonstrated relative stability during periods of geopolitical tension. Following ceasefire developments and a decline in dollar demand, the RMB has re-entered an appreciation cycle. Improvements in Middle East geopolitical conditions, particularly around Iran, are expected to remain supportive for RMB sentiment.
Structural Support from Trade and Energy Market Shifts
Since the escalation of geopolitical risks earlier this year, Chinese assets have increasingly been regarded as a relative “safe haven” by global investors.
Market expectations are supported by China’s strong strategic resource reserves and rapid expansion in renewable energy capacity, which enhance perceived resilience to global energy shocks.
Year-to-date, the RMB has outperformed many other Asian currencies. According to Wind data, as of April 8, the onshore RMB has appreciated 2.32% against the US dollar, while the offshore RMB has gained 2.15%.
Outlook: Stable Two-Way Volatility with a Mild Appreciation Bias
Pang Ming expects the RMB exchange rate to maintain two-way volatility in the short term, while preserving a gradual long-term appreciation trend, supporting its relative strength among global currencies.
He noted that as seasonal settlement demand is released, the RMB may face technical correction pressure above the 6.80 level. However, policymakers continue to emphasize a flexible, balanced exchange rate mechanism, discouraging one-way expectations and promoting market stability.
Analyst Wang Qing added that looking ahead, improving external trade conditions, steady export growth, and ongoing domestic demand stimulus policies are likely to support China’s macroeconomic fundamentals. Combined with elevated market sentiment and fluctuations in the US dollar index, the RMB is expected to maintain a stable-to-strong performance trend.
Summary
- RMB hits three-year high against the US dollar
- US dollar weakens due to lower yields and easing geopolitical tensions
- Seasonal export settlement drives short-term RMB demand
- China increasingly viewed as a macro-resilient safe-haven economy
- RMB expected to remain stable with mild appreciation bias
