Recent RMB Exchange Rate Decline: Causes And Impact On Bearing Exports
Apr 14, 2026| April 13, 2026 Industry News
1. Exchange Rate Review: Recent Strong RMB Appreciation
Since the beginning of 2026, the RMB has shown a significant appreciation trend against the US dollar. Wind data shows that as of April 10, the onshore RMB had appreciated 2.23% against the dollar, while the offshore RMB appreciated 2.16%. In the week of April 7-11, the onshore and offshore RMB rose by 470 basis points and 617 basis points respectively, or 0.68% and 0.90%.
On April 8, the onshore RMB closed at 6.8274 at 4:30 PM, hitting an intraday high of 6.8220 – the highest level since April 2023. The offshore RMB hit an intraday high of 6.8199, rising 364 basis points, also a three-year high.
Looking back over the past year, the RMB has followed a "first weak, then strong" pattern. From early 2025 to early April, rising global tariff policy risks put downward pressure on the RMB, with the offshore rate once depreciating past 7.40. Thereafter, as Sino-US trade negotiations progressed and the US dollar index turned from strong to weak, the RMB began a gradual appreciation, with onshore and offshore RMB up about 4.27% and 4.93% for the full year 2025.
[Table 1: Key RMB Exchange Rate Data]
| Date | Onshore Rate | Offshore Rate | Key Event |
|---|---|---|---|
| Early April 2025 | ~7.35 | briefly above 7.40 | US "reciprocal tariff" shock |
| End of 2025 | 6.9879 | 6.9697 | Both broke 7.0, highest since May 2023 |
| April 8, 2026 | 6.8274 | 6.8335 | Highest since April 2023 |
| Year-to-date 2026 | +2.23% | +2.16% | Stable and slightly strong |
2. Main Causes of the RMB Appreciation
2.1 External Factors: Weaker US Dollar is the Main Driver
(1) Easing Middle East tensions reduce safe-haven demand
On April 8, the US and Iran announced a ceasefire and the start of negotiations, putting a pause on over a month of conflict. As a result, market safe-haven demand fell sharply, and the US dollar index dropped about 0.73% in a single day. Safe-haven funds flowed from the dollar to non-US currencies, driving the RMB and other currencies stronger.
(2) Damaged dollar confidence leads to persistent USD weakness
Over the full year 2025, the US dollar index fell about 9.37%, its worst annual performance since 2017. The Fed's pivot to easing, high fiscal deficits, government shutdown risks, and trade protectionism have severely damaged dollar confidence. From mid-April to year-end, the dollar index fell about 4.45%. Li Liuyang, Chief FX Analyst at CICC Research, noted that as US government policies have loosened dollar credibility, the international monetary order is being reshaped, allowing the RMB to appreciate against the trend.
[Chart 1: Comparison of USD Index and RMB Exchange Rate Trends 2025-2026]
| Period | USD Index Change | RMB Exchange Rate Change |
|---|---|---|
| Early 2025 to early April | High volatility | Pressured to 7.35-7.40 |
| Mid-April to end 2025 | Down ~4.45% | Broke above 7.0 |
| April 2026 | Continued weakness | Rose to 6.82 |
2.2 Internal Factors: Strong Chinese Economic Fundamentals
(1) Exports remain high, trade surplus hits record
In the first 11 months of 2025, China's trade surplus exceeded $1 trillion for the first time, with exports growing year-on-year for ten consecutive months. Strong trade performance underpinned the RMB's appreciation.
(2) Resilient capital markets attract foreign inflows
In 2025, the Shanghai Composite Index rose 18.41% and the ChiNext Index rose 49.57%. Continued foreign capital inflows into the domestic market provided solid support for the RMB.
(3) Policy support for a stable exchange rate
Since April 2025, the RMB central parity rate has entered a stable and sustained appreciation trend, even appreciating in months when the dollar was clearly strong, sending a clear policy signal to stabilize FX market expectations.
3. Impact on Bearing Exporters
RMB appreciation is a double-edged sword for bearing exporters – both challenges and opportunities.
3.1 Challenges: Squeezed Profit Margins
Bearing exporters typically quote and settle in US dollars, while costs (raw materials, labor, manufacturing) are in RMB. RMB appreciation means:
Shrinking revenue: For a $1 million order, at 7.40 it converts to RMB 7.40 million; at 6.82 it converts to only RMB 6.82 million – a loss of about RMB 580,000, or 7.8%.
Profit squeeze: For bearing manufacturers with gross margins typically in the 10-20% range, exchange rate fluctuations can erode more than half of profits.
Reduced price competitiveness: The USD-denominated export price rises relatively, potentially affecting overseas order intake.
3.2 Opportunities: Forcing Industrial Upgrades and Risk Management
(1) High-end products have stronger pricing power
High-tech, less substitutable bearing products (e.g., ceramic bearings, precision stainless steel bearings) are less price-sensitive and thus less affected by exchange rate fluctuations. RMB appreciation will accelerate the exit of low-end capacity and force companies to transform to higher value-added products.
(2) Lower cost of imported raw materials
Some high-end steel, lubricants, and seals used in bearing manufacturing rely on imports. RMB appreciation reduces import procurement costs, partially offsetting losses on the export side.
(3) Hedging tools can effectively manage risk
The PBOC continues to improve cross-border RMB usage policies and support financial institutions in offering richer FX hedging products. Exporters can lock in exchange rates using forward settlement/sale and options to hedge against volatility.
[Table 2: Impact of RMB Appreciation on Bearing Exporters]
| Dimension | Short-term Impact | Long-term Response |
|---|---|---|
| Export revenue | USD revenue converts to fewer RMB | Increase product value, enhance pricing power |
| Order competitiveness | USD price relatively higher | Expand non-US markets, diversify settlement currencies |
| Import cost | Lower cost of raw material imports | Optimize procurement strategy |
| Profit margin | Gross margin under pressure | Improve automation, reduce costs, increase efficiency |
| Risk management | Increased uncertainty from volatility | Use forward settlement, options and other hedging tools |
4. Institutional Views and Outlook
Many experts believe the RMB will continue a steady-but-strong trend in the short term, though two-way volatility remains the norm.
Wang Qing, Chief Macro Analyst at Dongfang Jincheng, said that with a stable external trade environment, sustained high exports, and further policy efforts to boost domestic demand, the RMB is likely to continue a steady-but-strong trend amid sharp USD fluctuations.
Pang Ming, Senior Researcher at the National Finance and Development Laboratory, analyzed that the near-term outlook is one of short-term two-way volatility and long-term moderate appreciation. Many exporters may concentrate their FX settlement after Q1 earnings reports, putting some adjustment pressure on the exchange rate above 6.80.
Goldman Sachs recently raised its RMB forecast, expecting further strength.
Key variables include: Middle East geopolitical developments, Fed monetary policy signals, and the pace of domestic fundamental recovery.
1.Recommendations for bearing exporters:
2.Adopt a risk-neutral approach: do not bet on one-way moves; use hedging tools appropriately.
3.Optimize settlement currency mix: diversify into EUR, RMB and other currencies.
4.Enhance product competitiveness: shift to high-value, high-tech products.
5.Monitor policy developments: stay informed on FX stabilization signals and time settlement windows.