The RMB exchange rate is expected to continue to strengthen.
The RMB exchange rate is expected to continue to strengthen.
# On September 3, the Onshore RMB to USD Exchange Rate Rose Slightly According to Wind data, as of 16:30 on that day, the exchange rate in this market was reported at 7.1468 yuan, an increase of 8 basis points compared with the closing price of the previous trading day. # Recently, Both Onshore and Offshore RMB to USD Exchange Rates Have Shown an Uptrend Experts said that the rapid rise of the RMB exchange rate is driven by the resonance of internal and external factors. These factors include the relatively weak operation of the US dollar index, which has created a relatively moderate external environment; the quotation of the central parity rate of RMB against the US dollar has released a strong signal to guide exchange rate expectations; and the recent outstanding performance of the domestic equity market has attracted foreign capital inflows to a certain extent. Looking ahead, the RMB exchange rate will remain basically stable at a reasonable and balanced level. # Overall Strengthening On September 3, the trends of the onshore and offshore RMB against the US dollar were slightly differentiated. According to Wind data, as of 16:30 on that day, the onshore RMB to USD exchange rate was reported at 7.1468 yuan, up 8 basis points from the previous trading day, with an intraday high of 7.1374 yuan. The offshore RMB to USD exchange rate fell slightly, reporting 7.1459 yuan at 16:30, a decrease of 74 basis points compared with the closing price of the previous trading day. On September 3, the central parity rate of RMB against the US dollar also decreased slightly. Data from China Foreign Exchange Trade System showed that on that day, the central parity rate of RMB against the US dollar was reported at 7.1108 yuan, a decrease of 19 basis points from the previous trading day. Over a longer period, the RMB to USD exchange rate has shown an overall strong trend recently. According to Wind data, on August 29, the onshore RMB to USD exchange rate hit an intraday high of 7.1260 yuan; on the same day, the offshore RMB to USD exchange rate reached an intraday high of 7.1155 yuan, breaking through the 7.12 yuan mark, both setting new highs since last December. As of 16:30 on September 3, since August, the onshore and offshore RMB to USD exchange rates have increased by 0.64% and 0.88% respectively; since the beginning of this year, the cumulative increases of the onshore and offshore RMB to USD exchange rates have been 2.08% and 2.61% respectively. Data from China Foreign Exchange Trade System showed that as of September 3, since August, the central parity rate of RMB against the US dollar has been adjusted upward by a total of 386 basis points; since the start of this year, the cumulative adjustment upward has reached 776 basis points. "Since late August, the RMB to USD exchange rate has shown a relatively rapid appreciation trend, and both the RMB spot exchange rate and the central parity rate have strengthened together," said Li Liuyang, Chief Analyst of Foreign Exchange Research at the Research Department of CICC. # Driven by Multiple Factors Experts analyzed that the rapid appreciation of the RMB exchange rate in this round is mainly driven by multiple factors. External factors such as the weak US dollar have promoted the rapid appreciation of the RMB exchange rate. "The US dollar index has fallen significantly since the beginning of this year, while the appreciation range of the RMB ranks low among non-US currencies, reflecting the demand for catching up in appreciation," Li Liuyang said. Lu Zhe, Chief Economist of Soochow Securities and Co-Director of the Research Institute, stated that in August, against the background of rising market expectations for the Federal Reserve's interest rate cuts and the continued structural weakness of the US dollar index, the RMB spot exchange rate appreciated at a relatively fast pace. The recent improvement in cross-border capital flows has driven the accelerated appreciation of the RMB exchange rate. Ming Ming, Chief Economist of CITIC Securities, said that the recent outstanding performance of the domestic equity market has attracted foreign capital inflows to a certain extent, leading to a round of rapid appreciation of the RMB exchange rate. Li Liuyang noted that recently, the improvement in the flow direction of cross-border funds in the stock market may have a direct boosting effect on the appreciation of the RMB exchange rate. In addition, the quotation of the central parity rate of RMB against the US dollar has also released a strong signal to guide exchange rate expectations. "Since July, the central parity rate of RMB against the US dollar has maintained a gradual appreciation, and the guiding signals released have been gradually absorbed by the market," Lu Zhe said. Li Liuyang believes that the significant strengthening of the RMB exchange rate is partly due to the accelerated appreciation of the central parity rate of RMB against the US dollar. In his view, the People's Bank of China recently announced the issuance of 45 billion yuan of offshore RMB central bank bills, and the CNH Hibor (Hong Kong Interbank Offered Rate for Offshore RMB) has also shown a slight increase. The liquidity of offshore RMB may have tightened somewhat, which is regarded as another reason for the appreciation of the RMB exchange rate. # Convergence of Positive Factors Provides Support Experts believe that the current steady and positive momentum of China's economy will be further consolidated. With the coordinated efforts of policies and the support of fundamentals, the RMB exchange rate will remain basically stable at a reasonable and balanced level in the future. Since August, various policies have been implemented and have achieved results, driving the recovery of market confidence. Wen Bin, Chief Economist of Minsheng Bank, said that in the future, as various policies continue to be implemented and take effect, the steady and positive trend of the economy will be further consolidated, laying a solid foundation for the stable operation of the RMB exchange rate. "Looking ahead, the RMB exchange rate is likely to continue its steady trend," said Cheng Shi, Chief Economist of ICBC International. On the one hand, the transformation of China's economic structure continues to deepen, and consumption upgrading, scientific and technological innovation, and green transformation are constantly fostering new growth drivers, providing solid support for the international balance of payments and the capital market. On the other hand, under the role of coordinated policy efforts, China's assets still have relative attractiveness, which is conducive to stabilizing cross-border capital flows. Ming Ming said that the RMB exchange rate is expected to gradually return to the "triple convergence" of onshore, offshore, and central parity rates, and it is expected that the relevant foreign exchange settlement demand will continue to support the RMB exchange rate to remain strong. Focusing on the basic stability of the RMB exchange rate, the "Report on the Implementation of China's Monetary Policy in the Second Quarter of 2025" proposed to do a good job in the monitoring and analysis of cross-border capital flows, adhere to the bottom-line thinking, take comprehensive measures to enhance the resilience of the foreign exchange market, stabilize market expectations, prevent the risk of exchange rate overshooting, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.