On May 7, the offshore renminbi (RMB) strengthened past the 6.80 mark against the US dollar, hitting an intraday high of 6.7977. The onshore RMB also followed closely, coming within striking distance of 6.80, with both hitting their highest levels since February 2023. On May 8, the central parity rate of the RMB against the US dollar was set at 6.8502, a weakening of 15 basis points, compared to the previous fix of 6.8487.

Regarding the recent upward trend in RMB exchange rate fluctuations, industry experts generally believe that the weakening of the US dollar index is one of the direct causes.

"Driven by factors such as the easing of the Middle East situation and market expectations of intervention in the foreign exchange market by Japanese authorities, the US dollar index has been on a continuous decline since the end of April, breaking below the 98-point level as of now. This has driven a general appreciation trend among major non-US currencies, including the RMB," said Wang Qing, Chief Macroeconomic Analyst at Golden Credit Rating.

From an international perspective, changes in geopolitical risks in the Middle East have triggered a chain reaction, weakening the US dollar index. Zhao Qingming, Vice President of the Huiguan Research Institute, pointed out that previously, the continued tension in the Middle East had significantly increased demand for the US dollar as the world's primary safe-haven currency, pushing the US dollar index to remain strong, while the RMB and other non-US currencies generally came under pressure. "Currently, there has been a turning point in the Middle East situation, with global geopolitical risks receding. This has reduced demand for the US dollar's safe-haven attributes, causing the US dollar index to weaken."

Zhao also noted that the tense situation in the Middle East had previously directly pushed up international oil prices. As US-Iran relations have somewhat eased, international oil prices have fallen significantly, which has noticeably reduced the economic burden of high oil prices on energy-importing countries. This has improved economic fundamentals, further supporting the strengthening of the RMB and other non-US currencies.

Wang Qing pointed out that despite the US dollar index remaining broadly flat year-to-date, the onshore RMB has appreciated 2.6% against the US dollar. Meanwhile, RMB exchange rate indices against a basket of currencies, such as the CFETS index, have fluctuated upward to near their highest levels since early 2025.

It is noteworthy that the recent rise in RMB exchange rate fluctuations is backed by strong economic fundamentals. "Macroeconomic momentum has been robust this year, the external trade environment has stabilized, and export growth has accelerated significantly since the beginning of the year. All these factors provide important support for the RMB exchange rate," Wang Qing stated.

Looking ahead, industry experts point out that the current global environment still faces multiple uncertainties and unexpected risks. External challenges stemming from geopolitical conflicts and deep adjustments to global trade patterns persist. The RMB exchange rate is expected to continue its predominantly two-way fluctuation characteristic.

"While tensions in the Middle East have currently cooled, there may still be variables later on. This will remain a dominant factor driving the US dollar trend, and the global foreign exchange market will remain highly volatile. Going forward, the RMB exchange rate is expected to remain stable, generally maintaining an inverse correlation with the US dollar with relatively smaller fluctuations," Wang Qing said.

"Assuming other factors remain constant, looking solely from the perspective of geopolitical risks in the Middle East, if US-Iran relations continue to ease and eventually reach a negotiation agreement, the US dollar index is likely to weaken further, and major non-US currencies like the RMB could continue their upward fluctuating trend," Zhao Qingming said.