Strong Foreign Trade Growth Boosts RMB to Three-and-a-Half-Year High Against USD

On August 10, the onshore RMB closed at 6.7442 against the U.S. dollar, up 59 basis points from the previous trading day, hitting a new high since February 2, 2023. On the same day, the central parity rate of the RMB against the U.S. dollar was set at 6.7884, up 20 basis points, the strongest since February 10, 2023.

However, on August 11, the People's Bank of China authorized the China Foreign Exchange Trade System to set the central parity rate at 6.7900 yuan per U.S. dollar, down 16 basis points.

Lin Xianping, executive deputy secretary-general of the China City Expert Think Tank Committee and associate professor at Zhejiang City University, said in an interview: "This reflects that two-way fluctuations in the RMB exchange rate have become the norm."

Zhao Qingming, chief economist at Longhe Investment, said: "The high growth of imports and exports this year is a solid material foundation for the strength of the RMB; at the same time, PPI has turned positive, and moderate RMB appreciation helps curb or weaken imported inflationary pressure."

The latest July import and export growth remained robust. Data released by the General Administration of Customs on August 7 showed that in U.S. dollar terms, exports grew by 23.9% year on year in July and imports grew by 27.5%. Some analyses suggest that under the global AI investment boom, exports of chips and related products have surged significantly, becoming a major driver of overall export growth.

Looking ahead, interviewed experts believe the RMB exchange rate is expected to maintain a two-way fluctuation pattern within a reasonable range.

Lin Xianping told reporters: "It is expected that the RMB exchange rate will most likely show two-way fluctuations. The core variables are mainly the pace of Fed rate cuts, overseas demand, and the domestic export outlook; the central bank has sufficient tools to effectively smooth severe volatility."

However, Zhao Qingming noted: "It is expected that the RMB exchange rate may maintain a slight strengthening trend in the second half of the year. This stems from the current suppression of the U.S. dollar index; non-U.S. currencies including the RMB will strengthen. At the same time, a stronger RMB exchange rate can hedge part of the imported inflation pressure."

Some industry experts also said that as policies to stabilize growth continue to take effect, consumption and investment demand steadily recover, and the export structure continues to optimize, these will continue to provide strong support for the RMB exchange rate. At the same time, as the internationalization of the RMB advances, global central banks and offshore investors' allocation demand for RMB assets will continue to rise. These are long-term factors supporting the RMB to remain stable and even strengthen periodically.

The People's Bank of China pointed out at its 2026 second-half work meeting on August 1 that it is necessary to adhere to the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, strengthen expectation guidance, and keep the RMB exchange rate basically stable at a reasonable equilibrium level.

On the same day, the State Administration of Foreign Exchange (SAFE) also stated at its 2026 second-half foreign exchange management work exchange meeting that since 2026, the foreign exchange market has maintained stable and orderly operation. China's foreign exchange market has demonstrated strong vitality and resilience amid complex conditions, with the RMB exchange rate fluctuating two-way and rising steadily, and cross-border capital recording net inflows.

For foreign trade enterprises, Lin Xianping recommends adhering to a "risk-neutral" stance, optimizing the timing of foreign exchange settlement, adopting batch settlement or target-rate-triggered settlement, locking in existing orders through forwards, options and other tools, and avoiding speculative trading. In addition, enterprises should establish a normalized exchange rate tracking and stress-testing mechanism and incorporate exchange rates into quotation calculations.