Offshore RMB May Test 6.65 if 6.68 Support Breaks, DBS Strategist Says
Crhk · 1 SOURCESabout 2 hours ago2 MIN
Summary
The offshore renminbi broke through the 6.7 level against the dollar on Friday, with DBS Hong Kong Global Financial Markets Strategist Li Ruofan pointing to structural factors including an undervalued currency, expanding trade surpluses, and record foreign exchange settlement activity. Li sees the next technical resistance at 6.68, and if breached, the pair could test 6.65. The strategist noted that despite a year of sustained renminbi appreciation, mainland exports have remained robust, giving the central bank confidence to allow continued gradual strengthening.
Key Points
- Offshore and onshore renminbi breached the 6.7 level against the dollar on Friday, October 9, 2026, driven by structural rather than cyclical factors .
- DBS Hong Kong Global Financial Markets Strategist Li Ruofan identified multiple structural tailwinds: an undervalued renminbi offering appreciation room, strong export growth expanding trade surpluses, record current account surpluses, and the largest-ever wave of corporate forex conversion activity .
- The People's Bank of China has been systematically raising the renminbi central parity rate, incentivizing enterprises to convert dollar holdings into renminbi, with this settlement wave expected to fuel further appreciation .
- Technical analysis shows the next offshore renminbi resistance at approximately 6.68; if this level breaks, the currency could advance toward 6.65 as the PBOC signals tolerance for slow, measured appreciation .
- Despite one year of continuous renminbi strengthening, mainland exports have shown resilience, suggesting the central bank can allow continued currency appreciation without damaging economic growth .
Why It Matters
For Hong Kong investors and businesses, the sustained renminbi appreciation trajectory carries significant implications for currency exposure and cross-border trade. The PBOC's apparent comfort with gradual strengthening—evidenced by its willingness to let the currency break through key technical levels—suggests the appreciation cycle may extend further, potentially benefiting Hong Kong-listed mainland enterprises with renminbi revenues while creating headwinds for export-oriented firms. The resilience of mainland exports despite a year of currency gains indicates the AI-driven demand surge and competitive manufacturing advantages may be overriding traditional exchange rate sensitivity.
For Hong Kong investors and businesses, the sustained renminbi appreciation trajectory carries significant implications for currency exposure and cross-border trade. The PBOC's apparent comfort with gradual strengthening—evidenced by its willingness to let the currency break through key technical levels—suggests the appreciation cycle may extend further, potentially benefiting Hong Kong-listed mainland enterprises with renminbi revenues while creating headwinds for export-oriented firms. The resilience of mainland exports despite a year of currency gains indicates the AI-driven demand surge and competitive manufacturing advantages may be overriding traditional exchange rate sensitivity.