Onshore RMB strengthens to 6.7212 against USD hitting a new high since February 2023

Summary

Onshore and offshore RMB have surged to their highest levels since February 2023, with the onshore rate hitting 6.7203 . This rally is driven by the US Dollar Index (DXY) falling below 100, a surge in export settlement demand, and consistent long positions from Wall Street hedge funds . The PBOC has notably used its daily fixing to smooth the pace of appreciation, signaling a desire for stability rather than a trend reversal Zhitong.

Impact Analysis

So basically, we’re witnessing a ‘dam break’ moment for the RMB. While the DXY sliding below 100 is the catalyst , the real fuel is the massive backlog of corporate USD holdings finally being converted as exporters panic-sell their greenbacks . The most telling signal isn’t the spot rate, but the PBOC’s fixing: by significantly deviating from forecasts, they are ‘filtering’ the move Zhitong. They aren’t trying to kill the rally—they’re just trying to prevent a speculative overshoot.

The market might be missing that this isn’t just a weak-dollar story; the RMB is decoupling from other struggling Asian peers like the Yen . With Wall Street funds now buying $25M of CNH daily , we’re seeing a structural shift in sentiment. I’d read this as a green light for further RMB-denominated asset inflows. If the Fed remains sidelined , the momentum toward 6.70 looks inevitable. The trade here is positioned for a continued carry-trade unwind, but watch the PBOC’s ‘body language’ at the 6.70 psychological barrier.