The RMB exchange rate continues its recent strengthening trend. The People's Bank of China authorized the China Foreign Exchange Trading Center to announce that on February 25, 2026, the central parity rate of the RMB exchange rate in the interbank foreign exchange market was 6.9321 yuan per US dollar, an increase of 93 basis points from the previous trading day. Meanwhile, the onshore Chinese yuan closed at 6.8672 against the US dollar, up 177 basis points from the previous trading day. Industry insiders say that the recent strengthening of the RMB exchange rate is not driven by a single factor, but rather the result of multiple factors working together. In the medium to long term, it is highly likely that the RMB exchange rate will continue to fluctuate in both directions. From external factors, the weakening of the US dollar index is an important reason. Wang Qing, Chief Macro Analyst at Dongfang Jincheng, stated that the independence of the Federal Reserve has been impacted, putting pressure on the US dollar, and the "interest rate cut+balance sheet reduction" proposal of the new chairman of the Federal Reserve has not yet reversed the decline of the US dollar. The weakening of the US dollar has led to a general appreciation process of non US currencies, including the Chinese yuan. The weakening of the US dollar is not a short-term event, but the result of multiple factors such as the widening of the US fiscal deficit and increasing policy uncertainty. In this context, global funds are reassessing the allocation value of non US currencies, giving the renminbi a relative advantage. ”Pang Ming, a specially appointed senior researcher at the National Finance and Development Laboratory, said. From an internal perspective, Pang Ming believes that the resilience of domestic economic fundamentals is an important support for the positive performance of the renminbi. He said that in the context of marginal improvement in the international economic and trade environment, factors such as upgrading export structure, enhancing manufacturing competitiveness, and maintaining a high current account surplus have made the foreign exchange supply side relatively abundant. In addition, there are signs of improvement in cross-border capital flows, as the attractiveness of the bond market increases and the safe haven nature of RMB assets strengthens, leading to an increased willingness of overseas institutions to increase their holdings of RMB assets. Looking ahead, industry insiders generally believe that factors such as the China US interest rate differential, domestic economic recovery efforts, and global risk appetite will continue to affect the RMB exchange rate. In the medium to long term, the RMB exchange rate is expected to continue to fluctuate in both directions and maintain elasticity, with little possibility of unilateral appreciation. The factors that affect the rise and fall of the RMB exchange rate this year coexist. While bullish on the RMB exchange rate, do not ignore the potential risks. ”According to Guan Tao, Global Chief Economist of Bank of China Securities. Regarding the RMB exchange rate, the "Implementation Report of China's Monetary Policy for the Fourth Quarter of 2025" points out that we will adhere to a managed floating exchange rate system based on market supply and demand, adjust with reference to a basket of currencies, maintain exchange rate flexibility, give full play to the macroeconomic and international income automatic stabilizer functions of exchange rate adjustment, strengthen expectation guidance, prevent exchange rate overshoot risks, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. Pang Ming stated that the central bank's operation in the exchange rate formation mechanism focuses more on countercyclical adjustment, using methods such as middle price guidance and offshore liquidity management to suppress unilateral market expectations and avoid pro cyclical amplification effects. The goal of the policy is not to pursue appreciation, but to effectively guide market expectations, prevent exchange rate overshoot risks, and ensure the credibility of the renminbi in the global monetary system, "he said. Wang Qing also believes that if there is a sharp rise or fall in the RMB exchange rate that deviates from fundamentals in 2026, the monetary authorities will take decisive action to stabilize the foreign exchange market and release clear policy signals. (New Society)