① The trend of RMB appreciation has changed the financial operation habits of some enterprises. Since the second half of last year, they have consciously reduced the proportion of US dollar debt and switched to borrowing RMB for hedging purposes.
② Banking professionals reported that no concentrated foreign exchange settlement by enterprises was observed in the three trading days after the Spring Festival, but the number of settling enterprises has increased year-on-year since the beginning of this year. ③ The current RMB appreciation remains within a reasonable range based on fundamentals, with little likelihood of external intervention.
Just after the Spring Festival holiday, the RMB exchange rate experienced a strong upward movement. In just three trading days,$USD/CNY (USDCNY.FX)$、$USD/CNH (USDCNH.FX)$the exchange rate rose rapidly, with a phased appreciation approaching 600 basis points, breaking through the 6.87, 6.85, and even 6.83 levels, reaching a new high since April 2023.
“In fact, the RMB has maintained a good appreciation trend since the beginning of this year, and it has become more evident in the past two days.” A foreign exchange trader at an investment bank in Hong Kong told Cailian Press that on the one hand, the overall weakness of the US dollar; on the other hand, as the expectation of appreciation strengthens, enterprises that previously held foreign currency for observation have accelerated their foreign exchange settlement, forming a pro-cyclical force.
A financial officer of a large state-owned enterprise in Hong Kong stated that the RMB appreciation trend has changed recent financial operation habits. Since the second half of last year, they have consciously reduced the proportion of US dollar debt and switched to borrowing RMB as a hedge. By the end of last year, they had accelerated US dollar settlement to reduce exchange rate risks while repaying RMB debt. The company's foreign currency risk exposure is controlled at around 40%.
Multiple interviewees believe that the current appreciation is supported by fundamentals and actual enterprise demand, still operating within a reasonable range, and the likelihood of external intervention by regulatory authorities is expected to be low.
Settlement wave pushes three-day surge of nearly 600 basis points
From a time perspective, the appreciation over the past three days is not an isolated event.
Data shows that after the RMB exchange rate broke through the 7.0 level at the end of December last year, the RMB exchange rate continued its appreciation trend at the start of 2026, with the RMB against the US dollar remaining below 7. The highest offshore price this year was 6.9957. Since February, the cumulative appreciation of the central parity rate of the RMB exchange rate against the US dollar has exceeded 300 basis points, and the appreciation of both the onshore and offshore RMB against the US dollar has surpassed 2%.
“In fact, the RMB has maintained a good appreciation trend since the beginning of this year, and it has become more evident in the past two days,” the aforementioned Hong Kong trader further analyzed. Over the past few years, the trade surplus has been relatively large, with export enterprises accumulating significant US dollar assets, and the cost of holding foreign currency concentrated between 7.0 and 7.2. The current exchange rate is already significantly lower than the cost range, resulting in substantial positions being in a 'floating loss' condition. If settlements are not conducted promptly, book losses will erode profits, especially for listed companies and large institutions. Against the backdrop of strengthened expectations of appreciation, ‘panic-driven settlements’ objectively magnified exchange rate fluctuations.
The above-mentioned financial officer also noted that although many enterprises can adopt forward contracts to hedge risks, from the perspective of corporate performance assessment, settling now allows for more timely realization of revenue and profit indicators.
Relevant business personnel from a major bank's Guangdong branch told Caixin that they had not observed a concentrated surge in corporate foreign exchange settlement over the past three days. However, the number of companies settling foreign exchange has increased year-on-year since the beginning of this year. Amid expectations of RMB appreciation and interest rates lower than those of the US dollar, many cross-border enterprises engage in currency hedging arbitrage, which to some extent increases the demand for foreign exchange settlement.
According to estimates by GF Securities, Chinese enterprises still have an outstanding scale of foreign exchange settlement ranging from $725 billion to $1.14 trillion since 2022, with an average of approximately $932.2 billion.
The appreciation trend remains reasonable, but the 'double-edged sword' must be balanced.
In 2025, China's goods trade surplus reached $1.19 trillion, setting a new historical record. The appreciation trend of the RMB has a solid market foundation.
Data from the State Administration of Foreign Exchange shows that in January 2026, banks settled $286.3 billion and sold $206.5 billion worth of foreign exchange, resulting in a net settlement surplus of $79.8 billion. Banks’ agency-related foreign receipts and payments recorded a surplus of $82.1 billion, maintaining a net inflow pattern for cross-border capital.
However, the aforementioned financial executive stated that RMB appreciation benefits companies’ book profits through foreign exchange settlements, but excessive appreciation may affect export companies’ profitability. It is believed that once the exchange rate reaches a certain equilibrium level, it will fluctuate within a range.
Several interviewees also noted that if the pace of appreciation accelerates too rapidly, the central bank might intervene through measures such as guiding the central parity rate or adjusting offshore liquidity to implement 'counter-cyclical hedging.' However, the current appreciation remains within a reasonable range based on fundamentals, and external intervention is considered unlikely.
Caixin reporters also noticed that on February 25, the central bank issued two tranches of offshore central bank bills totaling 50 billion yuan through the CMU bond bidding platform of the Hong Kong Monetary Authority. Market institutions interpreted this as providing moderate support for the RMB exchange rate while promoting a more complete yield curve for offshore RMB bonds.
Market Outlook: Appreciation amid Two-Way Fluctuations
Looking ahead, market institutions generally believe that the RMB may face seasonal disruptions in the short term, but its medium-term trend remains strong.
Guo Lei's team, Chief Economist at GF Securities, believes that the RMB exchange rate often faces seasonal downward pressure from February to March, while the US dollar tends to strengthen during this period. However, the support from foreign exchange settlement has not been fully released. Based on the current exchange rate, approximately 79.8% of held positions are in a floating loss, suggesting that this round of foreign exchange settlement may not be a short-term impulse but could be related to the rebalancing of a 'delayed settlement cycle.'
Under scenario assumptions, institutions predict that from March 2026 to the second quarter, the RMB may maintain a relatively strong position amid two-way fluctuations and stabilize around the 6.85–6.87 range by the end of the year.
Editor/Melody