The RMB exchange rate strongly recovers the "7" level: offshore and onshore prices both hit historical highs
On Christmas Day, the RMB to USD exchange rate achieved a key breakthrough. According to Sina Finance market information, the offshore RMB (CNH) against the USD once broke the critical psychological level of 7.0, marking the first time since 2024.
On the same day, the onshore RMB (CNY) against the USD also rose to around 7.01, setting a new high since September 2024. The RMB central parity rate, an important benchmark for the exchange rate, was adjusted upward by 79 points to 7.0392, with the appreciation reaching the highest level since August 27, 2025.
This strong appreciation of the RMB is a concentrated reflection of the ongoing strengthening trend over the past month. Analysts generally believe that this round of appreciation is driven by the weakening of the external USD and support from internal fundamentals.
From the external environment perspective, the recent significant decline in the USD Index (DXY) has also provided favorable conditions for the appreciation of the RMB;
From the internal fundamentals perspective, the resilience and attractiveness of the Chinese economy form solid support, coupled with the seasonal release of concentrated corporate foreign exchange settlement demand approaching year-end, further boosting the strengthening of the RMB exchange rate.
Regarding future trends, market analysts generally expect a moderate appreciation of the RMB in 2026. However, to form an effective breakthrough and stabilize at the 7.0 level, it may still require further resonance of favorable factors both internally and externally. Analysts also remind that the recent rapid appreciation of the exchange rate also means that the momentum for reverse fluctuations is accumulating, and future volatility in the foreign exchange market may increase.
In addition, according to data from CME's "FedWatch" tool, the market expects an 84.5% probability that the Federal Reserve will maintain interest rates unchanged in January next year. This relatively "hawkish" expectation may continue to put pressure on the USD, thereby providing support for the RMB exchange rate from the external environment.
In summary, the RMB exchange rate breaking the 7.0 level is the result of the combined effect of a weakened USD creating external space and the resilience of the domestic economy alongside seasonal foreign exchange settlement demand providing internal momentum.
However, the rapid appreciation of the exchange rate has also accumulated a certain amount of momentum for reverse fluctuations, which may lead to significant increases in volatility in the foreign exchange market in the future. Therefore, while optimistic about its long-term resilience, market participants should also prepare for the normalization of two-way fluctuations.
