Offshore Renminbi Briefly Exceeds 7.12 for First Time in Nearly Ten Months, Future Trajectory Under Scrutiny

With both domestic and international conditions improving, the renminbi is demonstrating a wider range of movement in its exchange rate. Overnight, the offshore renminbi rallied sharply, briefly trading above 7.12 per U.S. dollar—a level unseen in almost ten months. By the close in New York, it settled at 7.1202, a 337-point gain from Wednesday’s close, having fluctuated between 7.1551 and 7.1183 during the session. The onshore spot rate also broke its consolidation, climbing toward 7.13 and marking a peak last seen in November.

Notably, the People’s Bank of China has been setting stronger daily reference rates. As of September 19, the midpoint rate has been adjusted higher for several consecutive days, accumulating a 258-point increase this week—the largest weekly strengthening since late September last year.

As spot rates advance, market expectations for renminbi volatility are rising in tandem. The one-month implied volatility for offshore options reached 3.275% on Thursday, the highest level in a month.

Bloomberg analysts suggest that easing trade tensions, improved market sentiment, and equity gains should further widen the renminbi’s flexibility. A measured appreciation may also encourage both domestic and foreign investors to hold renminbi, support China–U.S. negotiations, and boost consumer spending at home.

Economic fundamentals reinforce a case for gradual strengthening. China’s exports have remained robust year to date, with last month’s growth rate hitting its highest point since April. This diminishes the urgency to weaken the currency for export competitiveness. Meanwhile, the renminbi’s value against a basket of trading partners’ currencies remains below its five-year average, providing additional headroom for appreciation.