Preface
On September 17, 2025, the offshore RMB to USD exchange rate broke through the 7.10 mark, reaching 1 USD to 7.0976 RMB, hitting a new high in several months and attracting widespread market attention. The breakthrough of this key psychological barrier not only marks a significant strengthening of the RMB against the USD but also signals a new round of fluctuations in China's foreign exchange market. The changes in the RMB exchange rate have never been isolated events; they resonate with the nerves of both the Chinese and global economies. From macroeconomic policies to micro-enterprise operations, from international capital flows to domestic residents' lives, every fluctuation in the exchange rate can have far-reaching impacts. This article will delve into the driving factors behind the RMB's rise above the 7.10 mark against the USD, analyze its specific impacts on import and export trade, and attempt to predict future exchange rate trends to provide references for related decision-making.
The RMB exchange rate breaking through 7.10 has led to a positive market reaction: On September 17, the offshore RMB to USD exchange rate strongly broke through the 7.10 mark, with a significant daily increase, reaching a new high for the period. This performance triggered a positive market response, boosting investor confidence and leading to active trading in the foreign exchange market. The appreciation of the RMB means that the attractiveness of RMB assets has increased, and for investors holding RMB assets, the value of their assets rises accordingly. At the same time, the appreciation of the RMB also reflects the market's confidence in the fundamentals of the Chinese economy and recognition of the value of Chinese assets. Against the backdrop of RMB appreciation, participants in the foreign exchange market began to reassess the allocation ratio of RMB assets, with some funds potentially shifting from USD assets to RMB assets, further driving up the RMB exchange rate.
Multiple factors resonate, strengthening the RMB against the USD: The strong performance of the RMB against the USD is not coincidental but the result of multiple factors working together. Expectations of a Federal Reserve interest rate cut have intensified, putting pressure on the USD index. The performance of U.S. economic data, especially employment and inflation data, has a significant impact on the Federal Reserve's monetary policy. Recently, the number of initial jobless claims in the U.S. unexpectedly rose to 263,000, reaching a new high since October 2021, exceeding market expectations. Meanwhile, the U.S. CPI rose by 0.4% month-on-month in August, and the core CPI increased by 3.1% year-on-year. Although these figures are generally in line with expectations, the easing of inflationary pressures provides room for the Federal Reserve to cut interest rates. Market expectations for a rate cut at the Federal Reserve's September meeting have significantly heated up, with the "FedWatch" tool indicating a 93.4% probability of a 25 basis point cut this week. Once the Federal Reserve begins a rate cut cycle, the interest rate differential between the USD and other major currencies will narrow, reducing the attractiveness of the USD and leading to a weaker USD index. In contrast, non-USD currencies like the RMB will strengthen relatively, which is an important external factor for the appreciation of the RMB exchange rate.
The attractiveness of Chinese assets has increased, accelerating foreign capital inflows: The robust growth and transformation of the Chinese economy provide good investment opportunities for foreign capital. In recent years, China has made significant progress in fields such as technology, new energy, and high-end manufacturing, continuously enhancing the competitiveness of related enterprises and attracting considerable foreign capital attention. Additionally, the Chinese government has been continuously promoting the opening of financial markets, relaxing restrictions on foreign capital access, and improving the convenience of foreign investment, further enhancing the attractiveness of RMB assets. Under expectations of RMB appreciation, foreign capital has accelerated its inflow into China's stock and bond markets, seeking capital appreciation and exchange rate gains. The continuous inflow of foreign capital not only brings a large supply of foreign exchange but also increases the demand for RMB, providing strong support for the RMB exchange rate.
China's trade surplus has expanded, increasing demand for currency settlement: As a global manufacturing hub, exports have always been an important engine for economic growth in China. Despite facing challenges from slowing global demand and rising trade protectionism, Chinese exports have still shown strong resilience. Since 2025, China's export structure has continued to optimize, with an increasing proportion of high value-added products, and significant growth in exports to countries along the "Belt and Road" initiative, effectively offsetting the decline in exports to traditional markets. At the same time, the growth rate of imports in China has remained relatively moderate, keeping the trade surplus at a high level. Foreign trade enterprises have accumulated a large amount of foreign exchange income, such as USD, during the export process, which needs to be converted into RMB for domestic production operations and profit distribution. Under expectations of RMB appreciation, enterprises' willingness to settle in RMB has increased, and they are converting foreign exchange income into RMB, further pushing up the RMB exchange rate.
The People's Bank of China guides exchange rate policy, stabilizing market expectations: The People's Bank of China maintains a flexible and moderate approach to exchange rate policy, using various means to guide market expectations and maintain the stability of the RMB exchange rate. On one hand, the central bank adjusts the RMB to USD exchange rate midpoint to release signals for exchange rate regulation, guiding the market exchange rate to operate within a reasonable range. On the other hand, the central bank has strengthened macro-prudential management of cross-border capital flows to prevent shocks from short-term speculative capital and maintain order in the foreign exchange market. Additionally, the central bank uses tools such as open market operations and foreign exchange risk reserve ratios to adjust the supply and demand relationship in the foreign exchange market and stabilize market expectations. Under the effective guidance of the central bank, market expectations for the RMB exchange rate have become more rational, avoiding significant fluctuations in the exchange rate and creating a favorable environment for the stability and appreciation of the RMB exchange rate.
The appreciation of the RMB exchange rate: what is the impact on import and export trade? The appreciation of the RMB exchange rate has complex and multifaceted impacts on import and export trade, bringing both challenges and opportunities. Export enterprises face pressure, with short-term competitiveness being hindered. The appreciation of the RMB means that the prices of Chinese export goods in the international market rise relatively, which may reduce demand for Chinese goods among price-sensitive consumers. This is especially true for labor-intensive, low value-added export enterprises, such as textiles, clothing, and furniture, where RMB appreciation will directly erode their profit margins and weaken their international competitiveness. Some enterprises may face a decrease in orders and market share, and even incur losses. Furthermore, RMB appreciation may trigger "panic settlement" among some export enterprises, further exacerbating exchange rate fluctuations and increasing enterprises' foreign exchange risk.
Import enterprises benefit from lower costs and raw material procurement: The appreciation of the RMB is a significant advantage for import enterprises. Import enterprises need to pay in RMB to purchase foreign exchange for paying for imported goods. After the RMB appreciates, the same amount of RMB can be exchanged for more foreign exchange, thus reducing the cost of imported goods. This can effectively lower production costs and improve profitability for enterprises that rely on imported raw materials, components, and high-end equipment. For example, industries such as steel, chemicals, and aviation in China require large amounts of imported iron ore, crude oil, and aircraft each year, and RMB appreciation will directly reduce the procurement costs for these enterprises, enhancing their market competitiveness. At the same time, the decline in the prices of imported goods also helps to enrich the domestic market supply of goods, meet consumers' diverse needs, and promote consumption upgrades.
Optimizing and upgrading trade structure, promoting high-quality development: Although the appreciation of the RMB puts certain pressure on export enterprises in the short term, in the long run, it helps to promote the optimization and upgrading of China's trade structure. On one hand, RMB appreciation encourages export enterprises to accelerate their transformation and upgrading, increasing the technological content and added value of products, shifting from price competition to competition based on quality, brand, and service, thereby enhancing non-price competitiveness. On the other hand, RMB appreciation reduces import costs, facilitating enterprises to introduce advanced foreign technology, equipment, and management experience, thereby improving the overall level of domestic industries. Additionally, RMB appreciation may also prompt some enterprises to relocate their production bases to regions with lower costs, driving the restructuring of global industrial chains and providing opportunities for Chinese enterprises to optimize resource allocation on a global scale.