On September 8, the onshore RMB closed at 6.7108 against the U.S. dollar, down merely 2 basis points from the previous session. This near-static movement contrasts sharply with the central bank's midpoint fix, which was set 9 pips weaker. For textile exporters, such calmness reflects a reality: orders are available, but the windfall gains from currency depreciation have largely vanished. The subtle divergence between the official guidance and market pricing underscores a lack of consensus on the near-term direction of the exchange rate.
Exchange Rate and Liquidity: The Dual Logic of Narrow Fluctuation
The midpoint fix, set 9 pips weaker, is typically interpreted as a signal of official tolerance for gradual depreciation. However, the onshore spot rate barely followed, closing almost unchanged. This divergence suggests that market participants hold conflicting views—exporters hope for a weaker yuan to boost margins, while importers and financial institutions bet on interest rate differentials to support the currency. On the same day, the central bank conducted a 10-billion-yuan 7-day reverse repo operation, resulting in a net liquidity withdrawal of 40 billion yuan, with the operation rate unchanged at 1.40%. While the scale is minimal, the symbolism is significant: the central bank maintains a balanced approach to liquidity management, neither flooding the market nor tightening policy in response to currency movements. For textile enterprises, stable liquidity means financing costs are unlikely to spike in the short term, but the cumulative effect of net withdrawals warrants attention.
Industrial Transmission: Order and Profit Game in a Stable FX Regime
The narrow fluctuation of the exchange rate primarily affects textile foreign trade through order pricing. Over the past year, the cumulative appreciation of the RMB against the dollar has been limited, making it difficult for exporters to offset rising raw material costs through currency adjustments. For products like cotton yarn and chemical fiber fabrics, a stable and slightly strong yuan can compress gross margins by 1 to 2 percentage points. More importantly, the reduced volatility is altering corporate hedging strategies. In the past, companies delayed settlement to speculate on depreciation; now, such tactics carry unfavorable risk-reward profiles. Industry data indicates that in 2026, forward settlement contracts signed by textile enterprises increased by approximately 15% year-on-year, reflecting a shift toward locking in exchange rates to secure order profits. For buyers, a stable yuan reduces cost uncertainty for imported fabrics. However, if the U.S. Federal Reserve shifts policy and triggers passive RMB appreciation, imported fabrics could become more price-competitive, potentially undermining domestic fabric and printing/dyeing enterprises.
Practical Recommendations: Seeking Certainty in Stability
The current exchange rate environment is neither a one-way appreciation nor depreciation but a typical range-bound pattern. In such a scenario, the key to decision-making is no longer predicting the direction but establishing hedging mechanisms and flexible pricing capabilities.
For Exporters - Increase the ratio of forward settlement to more than 50% of order value, preferring tenors within three months to avoid over-locking and missing potential improvements. - Include exchange rate adjustment clauses in export contracts, stipulating that if the RMB fluctuates by more than 1.5%, both parties will renegotiate prices. - Monitor the deviation between the midpoint and spot rates; a sustained widening often signals policy changes, prompting adjustments in collection timing.
For Buyers - Utilize the current window of a stable and relatively low exchange rate to increase inventory of imported fabrics, especially high-value-added chemical fiber products, to lock in costs. - When signing long-term agreements with domestic suppliers, specify the assumed exchange rate range in the contract to avoid supplier price hikes due to RMB appreciation. - Keep a close watch on the central bank's open market operations; if net liquidity withdrawals continue for more than five consecutive trading days, be alert to rising funding costs that could affect supply chain payment terms.
The exchange rate acts as an invisible profit regulator for textile foreign trade. In the current low-volatility environment, the competition is not about forecasting currency movements but about the precision of risk management. The TexCircle editorial team will continue to track marginal changes in the exchange rate and liquidity conditions to provide timely strategic references for all parties in the industry chain.