1. Market Snapshot
On December 25, the offshore Chinese yuan (CNH) strengthened beyond the 7.0 level against the U.S. dollar, marking an important milestone in the recent foreign exchange market.
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Offshore RMB (CNH): Briefly reached 6.9920, the strongest level since September 2024.
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Onshore RMB (CNY): Rose above 7.01, currently trading around 7.0068, also the highest level since late September 2024.
This movement reflects a continuation of the RMB’s strengthening trend that began earlier this year.
2. RMB Exchange Rate Trend Review
Since May 2023, the RMB has spent most of the past two and a half years above the 7.0 level against the U.S. dollar.
Only once — on September 25, 2024 — did the exchange rate briefly return to the “6 range,” when the offshore RMB peaked at 6.9949.
Beginning in April 2025, the RMB has entered a sustained appreciation cycle, with a cumulative gain of approximately 6% against the U.S. dollar.
3. Key Drivers Behind RMB Appreciation
3.1 Shifting China–U.S. Macro Fundamentals
A structural divergence in economic fundamentals between China and the United States is becoming increasingly evident and is expected to continue into 2026.
United States:
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Consumer spending growth is slowing
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Unemployment rate is trending upward
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CPI inflation continues to ease
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Overall economic growth momentum is weakening
China:
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The official GDP growth target remains around 5.0%
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Domestic economic fundamentals remain relatively stable
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Policy support continues to strengthen confidence in long-term growth
These contrasting macro trends provide fundamental support for a stronger RMB.
3.2 Downward Pressure on the U.S. Dollar Index
The U.S. Dollar Index (DXY) is facing sustained downward pressure due to:
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Slowing U.S. economic activity
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Capital outflows from dollar assets
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Strengthening of major alternative currencies such as the euro and Japanese yen
As a result, the broad-based weakening of the U.S. dollar further reinforces the appreciation momentum of the Chinese yuan.
Conclusion
The recent breakthrough of the RMB below the 7.0 threshold reflects not short-term volatility, but a broader structural shift driven by diverging macroeconomic fundamentals between China and the United States. If current trends persist, the RMB is likely to remain relatively strong in the medium term, providing a more stable currency environment for international trade and cross-border investment.
