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the offshore rmb rose above 7 to the us dollar in early trading on wednesday, the first time since may last year. analysts pointed out that under the influence of internal and external factors such as the federal reserve's interest rate cut and china's strengthening of countercyclical policies, the rmb exchange rate has entered a moderate appreciation channel.

at around 9:00 beijing time, the offshore rmb was quoted at 7.0054 against the us dollar, up 55 basis points from the previous day's closing price. the previous high was 6.9952.

cheng shi, chief economist of icbc international, believes that according to his calculations, the rmb has entered a channel of moderate appreciation, and the central range of the rmb against the us dollar is expected to fluctuate between 6.8 and 6.9 in the next 12 months.

he pointed out that since the beginning of this year, china's trade surplus has been in good shape, reaching us$608.49 billion in the first eight months, up 11.2% year-on-year, which has led to a steady increase in foreign exchange reserves. changes in foreign exchange reserves are often positively correlated with the appreciation of the rmb. at the same time, with the fed's september rate cut, the downward trend in us treasury bond interest rates will also moderately push the rmb to strengthen.

last week, the federal reserve cut interest rates for the first time in four and a half years, announcing the official entry into a new round of interest rate cuts, with the first cut being 0.5 percentage points. the fed's interest rate path "dot plot" shows that interest rates may be cut by another 0.5 percentage points before the end of this year, 1 percentage point next year, and another 0.5 percentage point in 2026.

zhou ji, an analyst at nanhua futures, said that the current depreciation pressure of the rmb against the us dollar has been significantly reduced, mainly due to the positive changes in external conditions and the gradual release of the accumulated foreign exchange settlement demand in the market. before the results of the us election are announced, the overall operating environment of the spot exchange rate of the us dollar against the rmb is easy to fall but difficult to rise.

the moderate appreciation of the rmb has also opened up a broad space for policy strengthening. on tuesday, the people's bank of china announced a number of major measures, including lowering the deposit reserve ratio by 0.5 percentage points, lowering the policy interest rate 7-day reverse repurchase operation rate by 0.2 percentage points, and guiding banks to lower the interest rates of existing mortgage loans.

"during the (federal reserve) interest rate cutting cycle, as the interest rate gap between china and the united states gradually narrows, global investors may shift from high-valuation markets to low-valuation markets. geopolitical changes and china's continued advancement of high-quality development will further enhance the attractiveness of chinese assets. global funds are expected to increase their allocation to the chinese market, further supporting the value of the renminbi," said cheng shi.

however, analysts also warned that the current domestic macroeconomic data remains weak. among the "three major drivers", foreign trade has performed relatively well, but domestic demand such as investment and consumption has performed poorly. therefore, it is unlikely that the renminbi will appreciate significantly against the us dollar in the short term.