The RMB Spot Exchange Rate Against The US Dollar Broke Through The 7 Mark, Appreciating By 4% Cumulatively This Year.

Following the offshore market's breakthrough of the "7" mark on December 25th, the onshore RMB exchange rate against the US dollar also surpassed this level.

On December 30th, the spot RMB exchange rate against the US dollar strengthened and broke through the "7" mark, marking the first time it has surpassed this psychological threshold since October 2024.

So far this year, the spot RMB exchange rate against the US dollar has appreciated by 4%, with an accelerated appreciation trend since late November.

On the morning of December 25th, the offshore RMB exchange rate against the US dollar, which better reflects international investor expectations, broke through the "7" mark first, also recovering this psychological threshold for the first time since October last year.

Minmetals Securities, in its research report, points out that the RMB appreciation trend will continue, but it will be a slow and gradual process rather than a rapid and significant appreciation. Firstly, from an endogenous perspective, the interest rate differential between China and the US is expected to continue narrowing, providing upward momentum for the RMB exchange rate. Judging from important policy guidance such as the Central Economic Work Conference, China's monetary policy will continue to be loose, but it is not expected to be a large-scale, comprehensive policy; instead, it will focus more on targeted support. Meanwhile, the Federal Reserve's interest rate cut cycle has not yet stopped. The Fed's December dot plot shows that interest rates will still be cut by 25 basis points in 2026. Considering that the Fed is likely to have a very dovish Fed chairman in 2026, and that there may be significant personnel changes within the Fed, the number of rate cuts may increase. Therefore, the interest rate differential between China and the US is expected to continue narrowing, supporting RMB appreciation from a financial perspective. At the same time, if the new Fed chairman is too subservient to Trump's opinions, it will damage the Fed's independence, potentially further weakening the dollar and passively pushing up the RMB exchange rate. Secondly, from an external perspective, China's trade surplus will objectively lead to RMB appreciation.