Modest RMB Appreciation Coupled with Massive Central Bank Net Injection: Textile Exporters Face Profit Squeeze

The RMB exchange rate showed a modest appreciation signal in mid-July. On July 16, 2026, the People's Bank of China set the USD/CNY central parity at 6.7909, down 1 basis point from the previous day. Although the daily adjustment is small, coupled with the liquidity signals from the central bank's open market operations, textile export enterprises should reassess their foreign exchange risk management and capital arrangements.

Parallel Exchange Rate Appreciation and Liquidity Easing

On the same day, the central bank injected 626 billion yuan into the market through 7-day reverse repo operations. Considering 10 billion yuan in reverse repos matured that day, the net injection reached 616 billion yuan. The operation rate remained unchanged at 1.40%, indicating that the policy stance is to maintain reasonable and ample liquidity rather than further rate cuts.

For export-dependent textile enterprises, RMB appreciation means reduced actual income after settlement of USD-denominated orders. At the current exchange rate of 6.79, compared to around 6.90 a year ago, every $1 million order would yield about 11,000 yuan less after settlement. Given that profit margins for textile export enterprises typically range from 3% to 5%, this difference is enough to erode most of the profit space.

Industrial Cluster Reactions and Order Structure Changes

Feedback from major textile industry clusters such as Keqiao, Shengze, and Nantong indicates that small and medium-sized export enterprises have begun adjusting their quotation strategies. Some have shortened the validity period of quotes from 30 days to 15 days to avoid losses from exchange rate fluctuations. Meanwhile, to maintain competitiveness, some factories have chosen to sign floating exchange rate clauses with clients, agreeing to renegotiate prices when exchange rate fluctuations exceed a certain range.

It is worth noting that the loose liquidity environment provides enterprises with a low-cost financing window. The 626 billion yuan reverse repo injection directly lowered the interbank market interest rate, reducing the cost of funds obtained by enterprises through bill discounts or short-term loans. This can alleviate cash flow pressures caused by exchange rate appreciation to some extent, but it cannot fundamentally reverse the trend of shrinking export profits.

Practical Impact on Buyers and Export Enterprises

For Buyers - Include exchange rate adjustment clauses in contracts, clearly specifying a repricing mechanism when exchange rate fluctuations exceed 0.5%. - Prioritize cooperation with large suppliers that have foreign exchange hedging capabilities, as they can usually provide more stable quotes. - Consider settling in RMB to reduce exchange costs, leveraging the currency swap agreements signed between the PBOC and multiple countries.

For Export Enterprises - Immediately activate forward settlement tools to lock in settlement rates for the next 3-6 months, avoiding losses from unilateral exchange rate fluctuations. - Optimize order structure by shifting toward high value-added products (such as functional fabrics, recycled fiber fabrics) to enhance bargaining power. - Utilize the current low-cost funding window to purchase raw materials or upgrade equipment in advance, hedging against potential exchange rate risks in the future.