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China’s renminbi has strengthened sharply, creating fresh challenges for exporters in the world’s second-largest economy. At the Canton Fair in Guangzhou, exporters said the yuan’s appreciation is squeezing profit margins and forcing firms to adjust how they manage foreign-exchange risk.
Gloria Yu, owner of a bicycle and related components exporting company, said her firm has recorded meaningful losses on multiple orders this year due to rapid currency appreciation. Yu said she is looking for more effective ways to hedge exchange-rate fluctuations to avoid further losses.
Yu described a specific example: an order was priced at 7 yuan per USD, but by the time the payment was received the rate had moved to about 6.83 yuan per USD. When tensions in the Middle East later pushed the exchange rate back above 6.9 yuan per USD, she converted the USD proceeds into yuan quickly to limit the damage. She expects the yuan could rise to around 6.7 yuan per USD this year.
Lawrence Law, a sales manager from Jiangsu province exporting refrigeration equipment and copper tubes, said his company plans to convert USD into yuan when the rate approaches 6.9 yuan per USD. The current rate is about 6.83 yuan per USD.
Law said exporters are also renegotiating contracts to reflect currency fluctuations in product pricing. “If the renminbi continues to strengthen, our USD quotations will be higher,” he said.
Currency risk management has also shifted as interest-rate differentials and market pricing affect hedging incentives. A currency risk manager at a state-owned bank said many clients placed overnight orders to sell foreign currency in March, when overnight market moves offered better opportunities to sell USD at higher prices. The rate was typically 50–100 pips better than the domestic close, and sometimes as much as 200 pips.
The near one-way appreciation of the yuan since mid-2025 has put the People’s Bank of China in a balancing act: supporting domestic exporters while allowing the currency to strengthen to avoid frictions with trading partners concerned about China’s large export volumes.
As of February, the yuan had risen against the USD for seven consecutive months—the longest streak since early 2021. The rally has been supported by factors including improved US-China relations and broad USD weakness.
Although the US-Iran war has not appeared to have much impact on China’s market—partly because of the economy’s resilience to energy shocks—exporters have still been affected by currency moves. The yuan weakened against the USD in March like many other currencies, but it has since rebounded to its strongest level against the USD since the start of 2023.
Alex Loo, a strategist at TD Securities in Singapore, said exporters expect USD/CNY to continue falling, mainly due to broad-based USD weakness. He added that this expectation is reflected in net foreign-exchange settlement volumes above the average seen in recent months, indicating faster conversion of USD receipts into yuan.
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