The RMB to AUD exchange rate behind the scenes: Central bank guiding appreciation, can it continue in 2026?

On December 25th, the RMB showed a strong performance against the US dollar—USD/CNH fell to 6.9965, the lowest since September 2024; USD/CNY dropped to 7.0051, the lowest since May 2023. This breakthrough at a key point marks a new phase in the RMB appreciation cycle and also reflects profound changes in the global currency landscape.

Three Forces Resonating: Why the RMB Breaks Through Strongly

Weak US dollar as the Main Background

The Federal Reserve’s rate cut cycle has sent clear signals. The US dollar index has fallen more than 10% this year, with a decline of over 2% in the past month. Driven by the de-dollarization wave, the appeal of the US dollar as a safe-haven currency has significantly weakened, creating external space for the RMB to appreciate.

Central Bank Policy Guidance is Significant

The People’s Bank of China (PBOC) has continuously adjusted the midpoint rate (reference rate) for the RMB this year, forming a clear appreciation guidance. This policy stance not only stabilizes market expectations but also provides direction for exporters and investors. The PBOC’s delayed decision to further cut interest rates has further reinforced this signal.

Year-End Settlement as a Catalyst

China’s massive trade surplus accumulated by 2025 is released intensively at year-end. Seasonal settlement needs of enterprises push up the actual trading demand for the RMB. Coupled with the holiday effect of tight offshore liquidity, the strength of RMB appreciation is further amplified.

Wang Qing, Chief Macro Analyst at Orient Securities, pointed out: “The weakening US dollar and seasonal exchange settlement by export enterprises are the dual drivers of this wave.” He added that the continued appreciation of the RMB will attract more international capital into China’s capital markets.

Diverging Market Views: Is the RMB Undervalued?

Despite the recent strong appreciation momentum, many international institutions remain optimistic about the RMB’s prospects—this reflects their view that the RMB still has room to rise.

From the perspective of trade-weighted indices and China’s deflation, some analysts believe that the RMB’s fundamentals are still undervalued. Goldman Sachs’s assessment is more direct: the RMB is undervalued by about 25% relative to economic fundamentals. The bank expects USD/CNY to fall to 6.90 by mid-2026 and further to 6.85 by the end of the year.

ANZ Bank senior strategist Xing Zhaopeng holds a relatively moderate view, expecting USD/CNY to fluctuate between 6.95 and 7.00 in the first half of 2026, reflecting differing expectations among institutions regarding the magnitude of appreciation.

Bank of America assesses from the perspective of export momentum: improving US-China relations boost confidence among Chinese exporters, and it is expected that corporate USD selling will expand in 2026, pushing USD/CNY down to 6.80 before the end of the year.

Chain Reactions of Exchange Rate Appreciation

While the RMB/AUD exchange rate changes are less attention-grabbing than USD/CNY, they also reflect adjustments in the Asia-Pacific currency landscape. RMB appreciation, relatively speaking, strengthens its settlement position in regional trade, which has practical impacts on cross-border trade and investment flows.

Regarding the outlook for 2026, institutions generally expect continued RMB appreciation, but there are differences in the magnitude and pace of appreciation. Whether the central bank will continue to guide appreciation, whether the US dollar index can weaken further, and how the global trade pattern will evolve—all these variables will influence the final direction of the RMB exchange rate.