The RMB exchange rate continues to show a strong trend. Although it has corrected slightly over the past two trading days, the decline has been limited, and the overall level remains high. On April 20, the onshore RMB/USD exchange rate was reported at 6.8198; on April 14, it touched 6.8156, marking the highest level since March 2023.
JPMorgan Chase believes that corporate FX settlement demand constitutes a key pillar supporting the RMB's medium-term strength. The selling pressure of USD by Chinese enterprises is more persistent, maintaining strong momentum even after the seasonal factors associated with the Spring Festival have faded. Both the total foreign exchange settlement ratio and the net foreign exchange settlement ratio for March reached their highest levels for this period since 2020. More importantly, exporters are not only converting their current incremental USD earnings but are also actively drawing down USD savings accumulated over previous years.
At the same time, the RMB's safe-haven attributes are also improving. During the Middle East conflict, the USD/CNH exchange rate remained consistently below the 7.0 threshold. The relative stability of the RMB, combined with narratives around &#34;diversification of the petrodollar system&#34; and a rising share of RMB-denominated pricing in energy trade, has collectively strengthened its appeal as a safe-haven asset.
Based on the reinforced logic of a medium-term bullish outlook, JPMorgan Chase has raised its expectations for the RMB, consequently lowering its forecast for the USD/RMB exchange rate, projecting it will test the 6.70 level in the coming quarters. It is worth noting that the counter-cyclical factor has recently become active again, indicating a return of the central bank's regulatory willingness. However, JPMorgan Chase believes the central bank's most likely policy stance is to guide the orderly appreciation of the RMB through pace control rather than allowing rapid fluctuations.
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<h2>Enterprises Continue Selling USD, Settlement Potential Supports Medium-Term RMB Strength</h2>
Structural forces supporting the RMB's medium-term appreciation are accumulating, with continued USD selling by Chinese enterprises being a core driver.
Data from the State Administration of Foreign Exchange (SAFE) shows that corporate foreign exchange settlement momentum in March was strong, exceeding what can be explained by seasonal Spring Festival factors alone. The aggregate foreign exchange settlement-to-sales ratio for the month reached 71.0%, and the net settlement ratio stood at 7.7 percentage points, both being the highest levels for this period since 2020. This indicates that amid intensifying geopolitical tensions and currency volatility, enterprises are inclined to convert USD earnings into RMB, maintaining strong settlement willingness.
More notably, the scale of net USD sales by enterprises has exceeded the theoretical upper limit of converting new USD earnings. Net USD sales related to goods trade in March reached $60 billion, matching February levels, while the trade surplus narrowed during the same period. According to SAFE data, new trade-related USD earnings for exporters in March were approximately $50 billion, of which about 30% may have been settled in RMB. The remaining approximately $35 billion theoretically required settlement. Actual settlement volumes far exceeded this estimate, meaning exporters are not only settling new USD earnings but also actively drawing down USD savings accumulated over previous years.
JPMorgan Chase estimates that between 2022 and 2025, Chinese enterprises may have accumulated between $600 billion and $900 billion in overseas USD deposits. This massive stock of funds constitutes sustained settlement potential, sufficient to provide strong support for RMB appreciation over an extended period.
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<h2>Safe-Haven Attributes Rise, Rapid Increase in RMB Settlement Share for Commodities</h2>
In addition to corporate settlements, the rising status of the RMB as a global transaction currency is providing a pathway for its medium-term strength.
During the Middle East conflict, the USD/CNH rate consistently held below the 7.0 threshold, and the relative stability of the RMB significantly strengthened its narrative as a &#34;safe-haven currency.&#34; Meanwhile, discussions surrounding &#34;diversification of the petrodollar system&#34; and the rising share of RMB in pricing and settlement for energy trade have continued to heat up.
Data confirms this trend. The proportion of commodity-related RMB settlement amounts within the total value of RMB-denominated goods trade rose from approximately 5% in 2020 to about 20% in 2023. Looking at a longer cycle, the share of the RMB in cross-border settlement of goods trade has now approached 30%, a significant increase from 12% in 2018. Former Governor of the People's Bank of China Zhou Xiaochuan recently stated that with weakening market confidence in the USD and the continuous expansion of China's trade surplus, RMB internationalization is entering a &#34;golden period.&#34;
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<h2>Bullish on RMB to 6.70; Central Bank May Focus on Pace Control</h2>
Based on the aforementioned medium-term bullish logic, JPMorgan Chase further raises its outlook for the RMB, correspondingly lowering its USD/RMB exchange rate forecast.
Specifically, the bank has adjusted its target prices for the USD/RMB pair for the second to fourth quarters of 2026 and the first quarter of 2027, moving them sequentially from the previous flat projection of 6.85 per quarter to 6.80, 6.75, 6.70, and 6.70. The report notes that the 6.70 target primarily reflects judgments on the direction and magnitude of RMB appreciation rather than a precise prediction of the specific path; the actual appreciation process may be more tortuous than the forecast curve suggests.
Regarding central bank behavior, the People's Bank of China has recently shown signs of renewed counter-cyclical regulation, with the counter-cyclical factor reactivated. However, JPMorgan Chase believes the central bank will not &#34;draw a hard bottom line&#34;; the more likely policy stance is to guide orderly RMB appreciation through pace control rather than blocking the appreciation trend.
On the trading front, given the still significant deviation between the spot exchange rate and the midpoint rate, JPMorgan Chase currently maintains a neutral stance on USD/RMB. Nevertheless, the bank prefers to use currency rebound opportunities to re-establish short positions in USD rather than chasing long positions in USD at current levels.

JPMorgan Chase believes that sustained selling of USD by Chinese enterprises, combined with the enhanced safe-haven attributes of the RMB, jointly support its medium-term appreciation. Corporate FX settlement momentum is robust and extends beyond current USD earnings; massive stockpiles of USD savings accumulated over recent years are being accelerated into conversion, providing sustained upward pressure on the RMB. During the Middle East conflict, the RMB consistently held below the 7.0 level against the USD, while diversification of the petrodollar system and a rising share of RMB settlement in energy trade significantly boosted its safe-haven appeal

- The Chinese yuan continues to show a strong performance, with the onshore rate against the US dollar reported at 6.8198 on April 20, after reaching a high of 6.8156 on April 14.  
- JPMorgan attributes the yuan's mid-term strength to sustained corporate demand for currency conversion, highlighted by high foreign exchange settlement ratios reaching their highest since 2020.  
- Increased interest in the yuan as a safe-haven currency during geopolitical tensions supports its appreciation, with JPMorgan raising its forecast for the yuan to test levels around 6.70 in the coming quarters.

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JPMorgan Chase: Sell USD on Rallies, Corporate FX Settlement and Safe-Haven Demand Resonate, RMB Bullish in Medium Term