
In the last trading week before the Spring Festival, the RMB exchange rate saw a significant rebound, ending its previous weak trend. As of January 24th at 16:30, the onshore RMB rose by 462 points against the US dollar, closing at 7.2412. Throughout the day, the onshore and offshore RMB rates each reached as high as 7.2370 and 7.2389 against the dollar, marking a new high since last November.
The current rebound of the RMB exchange rate can be attributed to multiple factors. Firstly, domestic economic data exceeding expectations has provided positive signals to the market. Economic data released on January 17th indicated that China's economic growth significantly rebounded in the fourth quarter of 2024, with GDP year-on-year growth reaching 5.4%, far exceeding market expectations. This has improved market expectations for economic recovery in 2025. Meanwhile, the People's Bank of China has launched various policies to stabilize the exchange rate, including issuing 60 billion yuan of offshore RMB central bank bills and raising the macroprudential adjustment parameters for cross-border financing. These measures have effectively stabilized market expectations and supported the RMB exchange rate.
Moreover, strong exports from China before the Spring Festival and active settlement demand have further supported the RMB's recovery.
Externally, the expectation of rate cuts by the US Federal Reserve and the cooling of Trump's policies have also fueled the strengthening of the RMB. Since the inauguration of new US President Trump, trade policies have shown some relaxation, and no new tariff measures have been announced, leading to a decline in the dollar index. Additionally, changes in US inflation data have increased market expectations for Federal Reserve rate cuts, causing the dollar to further lose upward momentum, and non-dollar currencies, including the RMB, have generally rebounded.
Overall, the strong rebound of the RMB exchange rate is the result of both internal and external factors. In the future, as China's economic growth continues, export competitiveness strengthens, and policy tools for innovative capital markets gradually become normalized, the RMB exchange rate is expected to remain stable amidst bi-directional fluctuations, further enhancing the attractiveness of RMB assets.

