Can the Renminbi become an international reserve currency? Goldman Sachs predicts the US dollar will depreciate to 6.85 by 2026.

Renminbi internationalization is no longer just talk. Goldman Sachs’ latest analysis indicates that under the orderly promotion by the Chinese government, the RMB’s appreciation trend will continue to strengthen. It is expected that by 2026, the USD to RMB exchange rate will further rise to 6.85, an increase of about 5% from the current level.

This judgment is not made out of thin air. Recent performance of the RMB has already shown everything — as of November 26, the USD to RMB (onshore) exchange rate fell to 7.0824, and the offshore price even refreshed to 7.0779, hitting a one-year low. Meanwhile, the CFETS RMB exchange rate index rose to 98.22 on November 21, reaching a new high since April this year.

Policy-driven or market consensus?

The RMB appreciation is driven by a dual force. On one hand, the Federal Reserve has entered a rate-cutting cycle, reducing the attractiveness of the dollar; on the other hand, more critically, is the orderly guidance from the People’s Bank of China — the daily setting of the midpoint rate has continued to rise, and state-owned banks have frequently intervened in the foreign exchange market to buy dollars to stabilize the exchange rate. This is not passive appreciation but an active choice.

Kelvin Lam, senior economist at Pantheon Macroeconomics, pointed out the strategic implications: “On a deeper level, China is repeating the measures taken during the 1998 Asian financial crisis — by refusing to join the devaluation race to consolidate the credibility and regional position of the RMB.”

Internationalization is the ultimate goal

The appreciation of the RMB is more about an internationalization strategy than just an exchange rate issue. Kiyong Seong, Chief Asia Macro Strategist at Société Générale, emphasized: “Against the backdrop of global market turbulence, demonstrating the stability and strength of the RMB is precisely the most compelling proof of advancing its internationalization process.”

Data confirms this view. The latest data from the Bank for International Settlements shows that since 2022, the daily trading volume of USD to RMB has surged nearly 60%, reaching $781 billion, and its share in global foreign exchange trading has risen to over 8%. This means more and more international investors and institutions are beginning to settle transactions in RMB.

A dialogue with history

Compared to the RMB’s 5% decline during the 2018 trade war, the RMB appreciated nearly 3% by 2025. This shift reflects recognition of China’s economic resilience and policy stability. Goldman Sachs believes that, based on a comprehensive assessment of economic and non-economic factors, RMB internationalization has become a policy focus for the coming years, and the acceleration of appreciation and international use is an inevitable trend.