Recent RMB Exchange Rate Appreciation: Causes And Impact On Bearing Exports

1. Exchange Rate Review: Recent Strong RMB Appreciation Trend

The Renminbi (RMB) has witnessed a notable appreciation against the US dollar since the start of 2026. According to Wind data, as of April 10, the onshore RMB has appreciated by 2.23% against the US dollar, while the offshore RMB has recorded a 2.16% increase. During the week of April 7 to 11, the onshore and offshore RMB rose by 470 basis points (0.68%) and 617 basis points (0.90%) respectively.

On April 8, the onshore RMB closed at 6.8274 at 16:30 Beijing time, with an intraday peak of 6.8220, hitting the highest level since April 2023. Meanwhile, the offshore RMB surged 364 basis points to an intraday high of 6.8199, also marking a three-year maximum.

Over the past year, the RMB exchange rate has presented a trend of “weak first and then strong”. From early 2025 to early April 2025, rising global tariff policy risks exerted downward pressure on the RMB, with the offshore exchange rate once depreciating beyond 7.40. Subsequently, driven by the progress of Sino-US trade negotiations and the weakening US dollar index, the RMB entered a continuous appreciation phase. For the full year of 2025, the onshore and offshore RMB appreciated by approximately 4.27% and 4.93% respectively.

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. Core Causes of RMB Appreciation

2.1 External Factors: Weakened US Dollar serves as the Core Driving Force

(1) Eased Middle East tensions curtail global safe-haven demand

On April 8, the United States and Iran announced a ceasefire and official negotiation launch, ending the month-long regional conflict. The easing of geopolitical risks triggered a sharp decline in market safe-haven demand, leading to a 0.73% single-day drop in the US dollar index. Safe-haven capital flowed out of US dollar assets into non-US currencies, driving the overall appreciation of the RMB and other major currencies.

(2) Declining US dollar credibility sustains long-term USD weakness

The US dollar index tumbled by 9.37% throughout 2025, recording its worst annual performance since 2017. Multiple negative factors, including the Federal Reserve’s monetary easing shift, soaring fiscal deficits, potential government shutdown risks and rampant trade protectionism, have severely undermined global confidence in the US dollar. The index dropped by another 4.45% from mid-April to the end of 2025. According to Li Liuyang, Chief FX Analyst at CICC Research, US policy adjustments have weakened the dollar’s global credibility and accelerated the reshaping of the international monetary system, enabling the RMB to achieve counter-trend appreciation.

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: Solid Domestic Economic Fundamentals

(1) Sustained high exports and record-high trade surplus

China’s trade surplus exceeded 1 trillion US dollars for the first time in the first 11 months of 2025, with exports achieving year-on-year growth for ten consecutive months. The robust foreign trade performance has laid a solid foundation for RMB appreciation.

(2) Resilient capital markets attract continuous foreign capital inflows

In 2025, the Shanghai Composite Index rose by 18.41% and the ChiNext Index surged by 49.57%. Continuous foreign capital inflows into China’s domestic financial markets have provided strong support for the stable appreciation of the RMB.

(3) Targeted policy support stabilizes exchange rate expectations

Since April 2025, the RMB central parity rate has maintained a steady and continuous appreciation trend. The RMB even appreciated against a strong US dollar in certain months, sending a clear policy signal to stabilize market exchange rate expectations.

3. Dual Impact of RMB Appreciation on Bearing Export Enterprises

RMB appreciation acts as a double-edged sword for domestic bearing exporters, bringing both operational challenges and industrial upgrading opportunities.

3.1 Challenges: Squeezed Profit Margins and Weakened Competitiveness

Bearing export enterprises generally adopt US dollar pricing and settlement, while all production costs including raw materials, labor and manufacturing expenses are denominated in RMB. RMB appreciation directly brings negative impacts:

Reduced export revenue: For a 1 million US dollar order, the converted RMB revenue reaches 7.4 million at the exchange rate of 7.40, but only 6.82 million at 6.82, resulting in a direct revenue loss of approximately 580,000 RMB, equivalent to a 7.8% decline.

Severe profit squeeze: The gross profit margin of the bearing industry typically ranges from 10% to 20%. Current exchange rate fluctuations are capable of eroding more than half of enterprises’ net profits.

Declining price competitiveness: RMB appreciation raises the US dollar-denominated export prices of bearing products, which may reduce overseas order volume and weaken market competitiveness.

3.2 Opportunities: Driving Industrial Upgrading and Standardized Risk Management

(1) High-end bearing products possess strong pricing power

High-tech and low-substitutability bearing products such as hybrid ceramic bearings and precision stainless steel bearings are less sensitive to price changes and barely affected by exchange rate fluctuations. The appreciation of the RMB will accelerate the phase-out of low-end backward production capacity and force enterprises to transform and upgrade toward high-value-added, high-precision bearing products.

(2) Lower costs of imported raw materials

Key production materials for high-end bearings, including premium bearing steel, specialized lubricants and sealing parts, are mainly imported. RMB appreciation effectively reduces overseas procurement costs, partially offsetting the revenue losses in export business.

(3) Financial hedging tools mitigate exchange rate risks

The People’s Bank of China (PBOC) has continuously optimized policies for cross-border RMB application and encouraged financial institutions to launch diversified foreign exchange hedging products. Bearing exporters can lock in exchange rates through forward foreign exchange settlement and sales, as well as option tools, to hedge against exchange rate volatility risks.

Table 2: Comprehensive Impact of RMB Appreciation on Bearing Exporters

Dimension	Short-term Impact	Long-term Response
Export revenue	USD revenue converts to fewer RMB proceeds	Improve product added value and enhance independent pricing power
Order competitiveness	Relative increase in USD-denominated export prices	Expand non-US markets and diversify settlement currencies
Import cost	Reduced procurement cost of imported raw materials	Optimize global procurement strategy and supply chain layout
Profit margin	Continuous pressure on gross profit margins	Upgrade automated production, reduce costs and improve efficiency
Risk management	Heightened operational uncertainty from exchange rate volatility	Adopt forward settlement, options and other professional hedging tools

4. Institutional Views and Market Outlook

Industry experts generally believe that the RMB will maintain a steady and strong trend in the short term, while two-way floating volatility will remain the normal market state.

Wang Qing, Chief Macro Analyst at Dongfang Jincheng, pointed out that with a stable external trade environment, sustained high export volume and strengthened domestic demand stimulus policies, the RMB is expected to remain resilient and strong amid sharp fluctuations of the US dollar.

Pang Ming, Senior Researcher at the National Finance and Development Laboratory, analyzed that the RMB will witness two-way volatility in the short term and moderate appreciation in the long run. Many export enterprises will conduct centralized foreign exchange settlement after releasing Q1 financial reports, which may bring certain adjustment pressure on the RMB exchange rate above 6.80.

Goldman Sachs has recently upgraded its RMB exchange rate forecast, expecting further appreciation in the future.

The core variables affecting the RMB trend include Middle East geopolitical dynamics, the Federal Reserve’s monetary policy orientation, and the recovery pace of China’s domestic economic fundamentals.

Strategic Recommendations for Bearing Export Enterprises

1. Adhere to risk-neutral management, avoid unilateral exchange rate speculation, and rationally apply financial hedging tools to stabilize earnings.

2. Optimize the currency settlement structure and diversify settlement currencies such as EUR and RMB to reduce reliance on the US dollar.

3. Strengthen core product competitiveness, accelerate transformation to high-precision, high-tech and high-value bearing products, and weaken price competition dependence.

4. Track macro policy and exchange rate trends in real time, capture policy stabilization signals, and arrange foreign exchange settlement reasonably to optimize earnings.

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