On July 17, the onshore RMB closed at 6.7773 against the US dollar, dropping 95 basis points, continuing the recent two-way fluctuation trend. The same day, the central bank injected a net 430.5 billion yuan through 7-day reverse repos, with the operation rate unchanged at 1.40%. These two figures together send a mixed signal to textile exporters: a short-term profit boost from currency weakness, but a medium-term cost pressure warning from liquidity management.
Currency Weakness: A Short-Term 'Bonus' for Export Profits
The most direct impact of RMB depreciation is that exporters receive more RMB when settling dollar-denominated orders. At the closing rate, each $1 million order yields about 9,500 RMB more than the previous day. For textile foreign trade companies with thin margins and fast turnover, this effectively adds 0.5-1 percentage points to gross margin. However, this gain is 'one-time.' Whether companies can actually pocket it depends on the timing of settlement. If firms hold dollar receivables without converting, a reversal in exchange rate could quickly erode the paper profit. Customs data show the typical export collection period for textiles is 30-60 days, during which exchange rate fluctuations can easily cover or exceed this 95-point drop.
Liquidity Injection: Another Reading of Policy Direction
The central bank's net injection of 430.5 billion yuan in a single day is relatively high for the year. The unchanged operation rate indicates this is not a rate cut signal but a 'water replenishment' move to address short-term liquidity pressure. Combined with recent weak economic data and sluggish corporate credit demand, this action suggests policymakers are alert to tight capital chains in the real economy, especially for small and medium manufacturers. For textile companies, ample liquidity helps ease short-term financing costs. But the 7-day tenor means the easing is 'pulsed' rather than sustained. Companies that expand inventory or take on long-payment orders based on this may face a rebound in funding rates at month-end.
Import Cost Pass-Through: The Other Side of Profit
RMB depreciation is not all positive. The textile upstream relies heavily on imports—cotton, wool, and chemical fiber raw materials (like PTA, MEG) are all dollar-denominated. For every 1% fall in the exchange rate, import raw material costs rise by 1%. For example, China imported about 1.2 million tons of cotton in the first half of 2026. If the RMB continues to weaken, each ton's import cost will increase by 300-500 RMB. This cost must either be absorbed by weaving mills, squeezing processing margins, or passed downstream to fabric and garment links, ultimately weakening export price competitiveness. At the current exchange rate, exporters and importers of raw materials face opposite situations: the former gain from exchange rate differences, the latter lose. For large textile groups handling both imports and exports, this acts as an internal hedge, but small and medium single-business companies must make clear risk management choices.