Exchange rates are one of the most concerned issues for foreign trade factories. In 2026, the RMB exchange rate will fluctuate more, from 7.2 at the beginning of the year to 6.8 in the middle of the year, and then to 7.1 at the end of the year, with fluctuations exceeding 5%. For foreign trade factories with profits of only 5-10%, exchange rate fluctuations may directly eat up all profits or even lose money. This article analyzes the RMB exchange rate trend in 2026 and the factory's response strategies.
1. Review of RMB exchange rate trend in 2026
1. Trend for the whole year: rising first and then declining, with increasing fluctuations
RMB exchange rate trend in 2026:
- 1-3 months: RMB appreciation, rising from 7.2 to 6.9, putting pressure on profits of exporting companies
- 4-6 months: The RMB continues to appreciate, reaching as high as 6.8, and many factory orders are eaten up.
- 7-9 months: The RMB began to depreciate and returned to 7.0, exporting companies breathed a sigh of relief
- 10-12 months: RMB fluctuates between 7.0 and 7.2, increasing uncertainty
The annual fluctuations exceed 5%. For factories with profits of only 5-10%, exchange rate fluctuations may determine whether a single order is profitable or losing.
2. Main factors affecting exchange rates
fed's monetary policy: The Federal Reserve will cut interest rates twice in 2026, the US dollar will weaken, and pressure on RMB appreciation will increase. However, inflation rebounded in the second half of the year, the Federal Reserve suspended interest rates, and the dollar strengthened again.
China Economic Data: In the first half of the year, China's economic recovery exceeded expectations and the RMB appreciated; in the second half of the year, real estate and consumption data were weak, and the RMB depreciated.
Sino-US trade relations: The RMB depreciates when trade conflicts occur, and appreciates when relations ease. In 2026, Sino-US relations will be good and bad, and exchange rate fluctuations will increase.
international capital flows: The RMB appreciates when foreign capital flows into China and devalues when foreign capital flows out. International capital flows will fluctuate greatly in 2026.
2. Five impacts of exchange rate fluctuations on foreign trade factories
1. Directly affect profits
This is the most direct impact. Examples:
- An order of US$100,000, the exchange rate at the time of receiving the order is 7.2, and the estimated revenue is 720,000 RMB
- Three months later, the exchange rate rose to 6.8 when the payment was received, and the actual income was 680,000 yuan
- A loss of 40,000 yuan may be the entire profit of this order
Many factories calculate a profit of 5% when receiving orders, but when receiving them, the exchange rate changes, which becomes a loss.
2. Difficulty in quoting
The exchange rate fluctuates greatly, and the factory dares not quote:
- The price is high, the customer thinks it is expensive, and the order runs away
- If you report low, you will lose money if the exchange rate changes
- The validity period of the quotation is not too long, and the customer is not satisfied
Many factories dare not accept long and large orders due to exchange rate issues.
3. Changes in competitiveness
When the RMB appreciates, China products will become more expensive in the international market and their competitiveness will decline. Customers may turn to countries such as Vietnam and India.
When the RMB devalues, China products become cheaper and their competitiveness increases, but they are also vulnerable to anti-dumping.
4. Payment risk
When exchange rates fluctuate greatly, customers may delay payment and wait until the exchange rate is in their favor. The factory's payment collection cycle has become longer and the pressure on funds has increased.
5. increase in finance costs
In order to hedge exchange rate risks, factories need to make forward foreign exchange settlement and sales, options and other financial instruments, which increase financial costs and complexity.
3. Six strategies for factories to deal with exchange rate fluctuations
Strategy 1: Add exchange rate buffer when quoting
Consider exchange rate fluctuations when quoting and add a buffer:
- If the RMB is expected to appreciate, the price will be calculated at an exchange rate 2-3% lower than the current exchange rate
- Shorten the validity period of the quotation to 7-15 days, and re-quote after the validity period
- For large orders and long orders, exchange rate adjustment terms are agreed (if the exchange rate fluctuates more than 3%, the price will be renegotiated)
Example: The current exchange rate is 7.2, and the quotation is based on 7.0, leaving a 2% buffer for exchange rate fluctuations. Even if the RMB appreciates to 7.0, you will not lose money.
Strategy 2: Use forward foreign exchange settlement and sales to lock in the exchange rate
This is the most commonly used exchange rate hedging tool:
- When receiving an order, agree with the bank to settle foreign exchange at a certain exchange rate three months later (for example, 7.1)
- Regardless of whether the exchange rate is 6.8 or 7.5 in three months, the settlement will be settled at 7.1.
- Lock in profits and avoid exchange rate fluctuations
Advantages: Lock the exchange rate and produce with peace of mind. Disadvantages: If the RMB depreciates, you won't enjoy the benefits of devaluation.
recommendations: If the order amount is large and the profit is thin, use forward settlement and sales to lock in at least 50% of the amount.
Strategy 3: Shorten collection cycles
The shorter the collection period, the smaller the exchange rate risk:
- Increase the deposit ratio (from 30% to 40-50%)
- Pay the final payment before shipment, and do not see a copy of the bill of lading for payment
- Old customers can talk about advance payment, but new customers must pay until delivery.
- Use letter of credit or CITIC Insurance to reduce the risk of payment collection
The collection cycle was shortened from 3 months to 1 month, and the exchange rate risk was reduced by 2/3.
Strategy 4: Settlement in RMB
More and more countries accept RMB settlement:
- Many customers in Southeast Asia, the Middle East, Latin America, and Africa can pay in RMB
- Settlement in RMB has no exchange rate risk at all
- You can talk to the customer: If you settle in RMB and give a 1-2% discount, the customer is also willing to
In 2026, the proportion of RMB cross-border settlement will continue to increase, and factories can take the initiative to ask customers whether they accept RMB payments.
Strategy 5: Spread risk across multiple currencies
Don't just do the US dollar market, disperse into markets such as euros, British pounds, and Japanese yen:
- Different currencies have different exchange rates, which can hedge risks
- When the dollar appreciates, the euro may depreciate, and vice versa
- Multiple market layout reduces risks in a single market and single currency
Strategy 6: Increase added value of products and reduce price sensitivity
The most fundamental solution: Increase the added value of products and make profits thick enough so that exchange rate fluctuations will not affect survival.
- From low-price competition to brand, quality, and service competition
- Develop new products and increase profit margins to more than 15%
- Making customized products, customers are not sensitive to price
- Establish long-term cooperative relationships, customers will not change suppliers due to exchange rate fluctuations
4. Forecast of exchange rate trend in the second half of 2026
Based on various factors, the RMB exchange rate in the second half of 2026 may:
- overall interval: Fluctuations between 6.9 and 7.3
- volatility increased: Affected by Federal Reserve policies, Sino-US relations, and China's economic data, fluctuations in a single month may exceed 2%
- long-term trend: China's economic fundamentals are stable, and it is unlikely that the RMB will depreciate significantly
But predicting exchange rates is very difficult, and even professional institutions often make mistakes. Factories should not gamble on the direction of the exchange rate, but hedge well and survive no matter how the exchange rate changes.
5. Common questions
Q: Exchange rates fluctuate greatly. Should I take long orders?
A: You can accept it, but risk control must be done well: 1) Add an exchange rate buffer when quoting;2) Use forward settlement and sales to lock in the exchange rate;3) agree on exchange rate adjustment terms;4) Increase the deposit ratio. Don't run naked to take long orders, otherwise you will lose money when the exchange rate changes.
Q: How to handle forward settlement and sales? What conditions are needed?
A: Factories with import and export rights can handle them at banks. You need to have a real trade background (order contract) and sign a forward settlement and sales agreement with the bank. Generally, no margin is required, or only a small margin is required. Consult your bank for details.
Q: What should I do if the customer insists on paying in US dollars?
A: You can use US dollars, but hedging must be done well: 1) quotation plus exchange rate buffer;2) use forward settlement and sales to lock in;3) shorten the collection cycle. You can also talk to customers: Many customers are willing to settle in RMB to give discounts.
Q: Is it necessary for small factories to hedge exchange rate?
A: It is necessary. Small factories have thin profits and weak ability to resist risks, and exchange rate fluctuations may directly affect survival. Even if the order is not large, it should be locked in with forward settlement and sales, or buffered when quoting. Don't think that "it doesn't matter if the amount is small", it's a big loss if it accumulates.
Q: When the exchange rate fluctuates, how to negotiate price increases with customers?
A: 1) Notify customers of the exchange rate situation in advance to make customers mentally prepared;2) Use data to speak and show the impact of exchange rate changes on costs;3) Give a plan: either accept the price increase, shorten the payment period, or settle in RMB;4) Old customers can gradually increase their prices, and new customers can directly quote at the new exchange rate.
summary
In 2026, increased fluctuations in the RMB exchange rate are the norm, and foreign trade factories must learn to deal with it. The core strategy is: not to bet on the direction of the exchange rate, hedge well, and lock in profits. Specifically, these include: quotation plus buffering, forward settlement and sales of foreign exchange, shortening of collection cycles, RMB settlement, diversification of multiple currencies, and increasing the added value of products.
Exchange rate risk is part of foreign trade. Only by managing exchange rate risk well can we survive and develop amid fluctuations. Don't let exchange rate fluctuations eat up your profits, and don't be afraid of taking orders because you are afraid of exchange rate risks.
Qihang AI focuses on helping factories do AI foreign trade to attract customers. While helping factories develop customers, it also shares experience in exchange rate risk management and foreign trade practical operations, so that factories can not only get orders, but also make money. If you want to know more practical skills in foreign trade, you can pay attention to our industry information.
