China’s Monetary Policy and Economic Outlook in 2025

As 2025 unfolds, China’s monetary policy has become increasingly flexible and strategic. Since late 2024, the People’s Bank of China (PBOC) has conducted multiple operations using the Medium-Term Lending Facility (MLF) and implemented targeted reserve requirement ratio (RRR) cuts to stabilize market liquidity. These actions aim to stimulate domestic demand and support the struggling real estate and export sectors.

Ongoing Expansion of the Digital Yuan (CBDC) Pilot

As of Q1 2025, China’s digital currency—the digital yuan (CBDC)—has been piloted in over 30 cities across Mainland China and extended to Hong Kong, Macau, and selected cross-border trade platforms. This new form of Chinese currency may become a key driver of the Renminbi’s internationalization in the future.

RMB Pressure from Inverted US-China Interest Rate Spread

In 2025, the Federal Reserve continues to maintain high interest rates to combat inflation, while China leans toward an accommodative monetary stance. This divergence has led to a prolonged inversion in the US-China interest rate spread, exerting downward pressure on the RMB. By March 2025, the RMB/USD exchange rate had once again approached 7.30.

Foreign Reserves and Exchange Rate Defense

China’s foreign exchange reserves remained steady at USD 3.15 trillion at the beginning of 2025. While the PBOC retains the capability to stabilize the exchange rate, it is unlikely to intervene without limit. According to Bloomberg reports, Chinese authorities may treat the 7.35 level as a key exchange rate defense line, using counter-cyclical factors as a signaling mechanism to the market.

RMB Trend Analysis

Historical Trend Review

Since the outbreak of COVID-19 in 2020, the RMB has undergone significant two-way volatility. In 2022, due to successive rate hikes by the Federal Reserve, the RMB weakened beyond 7.30 against the US dollar. In 2023, as China’s economy gradually recovered, the currency saw a short-term rebound. However, in 2024, global demand weakened and US-China trade tensions resurfaced, causing the RMB to depreciate again, fluctuating within a range of 6.85 to 7.40 throughout the year.

▲USD/RMB Historical Trend

Historical Trend Overview

Over the past decade, the Chinese currency has shown a “policy-driven + market-reactive” pattern of volatility. For instance:

• August 2015 Devaluation: A currency reform triggered market panic, and the RMB fell to 6.4.
• During the 2018 Trade War: The RMB depreciated to around 6.95.
• 2022 Fed Rate Hike Cycle: The CNH dropped below 7.3.

Currently, the monthly chart of the RMB shows Fibonacci retracement support near 7.35. If this level is breached, the next upside target is 7.50. However, if the PBOC steps in with strong intervention, a pullback toward the 6.85 resistance level may occur.

Potential RMB Support and Resistance Factors in 2025

Support factors:

• The Chinese government increasing infrastructure spending
• Continued net inflows of foreign capital into the bond market
• Improved offshore RMB liquidity

Pressure factors:

• Delayed Fed rate cut timeline
• Heightened US-China geopolitical tensions
• Persistent domestic deflation risk not yet fully resolved

Key Technical Levels

According to technical indicators:

• RSI:The current Relative Strength Index for the RMB is around 45, indicating a slightly bearish to neutral stance.
• MACD:The short-term moving average has crossed below the long-term average, forming a bearish setup.
• Trendline:The early 2025 high sits at 7.25. If the 7.10 support level is breached, the RMB could retest 7.00 in the short term.

Traders are advised to closely monitor the USD/RMB daily chart and align entries with key economic data release timings.

The Impact of RMB Movements on Forex Trading

As a key indicator of China’s currency performance, RMB fluctuations have a significant ripple effect on the global forex market, particularly among Asia-Pacific currencies. Below are some common strategies and suggestions:

• Speculative Trading:Through the USD/CNH currency pair, investors can engage in high-leverage trading to capitalize on short-term RMB volatility.
• Hedging: Exporters and importers can use forward contracts or options to hedge against RMB exchange rate risks.
• Regional Currency Correlation:RMB depreciation often triggers simultaneous weakening in currencies like the Japanese yen (JPY), South Korean won (KRW), and New Taiwan dollar (TWD), creating cross-pair trading opportunities.

Risk Management Tips During High Volatility

• Set both stop-loss and take-profit levels to avoid emotional trading
• Manage position leverage carefully to reduce margin call risk
• Use demo accounts to backtest strategies and build experience

How to Trade the Chinese Currency?

As a professional forex broker, Ultima Markets (UM) offers a comprehensive solution for trading the Chinese currency, helping investors capture profit opportunities amid volatility.

Powerful Platform Features:

• Supports RMB currency pair trading, including major pairs like USD/CNH and EUR/CNH
• High leverage trading (up to 1:2000), ultra-low spreads (as low as 0.0 pips for ECN accounts)
• Fast execution speedswith average latency under 20 milliseconds
• Equipped with Trading Central technical analysis toolsfor real-time entry and exit signals

Comprehensive Educational and Demo Resources:

• Free demo accounts with up to $100,000 in virtual funds
• Live market commentary and technical chart analysis
• Beginner tutorials and strategy labs for traders of all levels

Absolute Fund Protection:

• Client funds held with Westpac Bank in Australia
• Funds are fully segregatedfrom company operations
• Backed by the Financial Commission’s compensation fund, offering up to €20,000 per client
• Additional insurance coverage of up to $1,000,000

Limited-Time Promotions:

• Earn an extra 1% profit on every closed trade before July 1, 2025
• Multiple deposit options supported, includingcredit cards, cryptocurrencies, e-wallets, and wire transfers

FAQ: Common Questions About RMB Trading

Q1: Can Taiwanese citizens open a CNH account?

Yes, they can open an offshore account via a Hong Kong bank or trade CNH directly through the UM platform.

Q2: Should I buy or sell RMB when it depreciates?

It depends on the context. If a policy reversal is anticipated, buying at a low could be a strategic opportunity.

Q3: Do China’s foreign exchange controls affect forex trading?

Controls mainly target capital account flows and have limited impact on CNH trading through platforms.

Q4: How much capital is needed to trade RMB on Ultima Markets?

The minimum trade size is just 0.01 lots. Beginners can also practice risk-free with a demo account.

Conclusion: Track China’s Currency to Expand Your Global Investment Vision

As the global financial landscape becomes increasingly complex in 2025, China’s currency reflects more than domestic economics—it plays a growing role in international capital markets. RMB trends will continue to be shaped by global policy shifts, Fed interest rates, and Chinese economic indicators.

Investors who can accurately track RMB developments—paired with a reliable platform like Ultima Markets—will not only hedge effectively but also seize profit opportunities across short, medium, and long-term horizons. Master the RMB, and you master a key to the future of global investing.