Core Insights - The article discusses the recent trends in the foreign exchange market, particularly focusing on the RMB/USD exchange rate and the behavior of banks in managing foreign exchange positions amid changing market conditions [1][12]. Exchange Rate Trends - Since March 2025, the RMB has shown an upward trend against the USD, with banks experiencing a continuous surplus in foreign exchange settlements for six months, the longest period since August 2021 [1]. - The average exchange rate for bank settlements has increased by approximately 1.2% compared to previous periods, indicating a "buy low, sell high" strategy [14]. Historical Context of Exchange Rate Fluctuations - The article outlines six phases of RMB exchange rate trends since the 2005 reform, highlighting periods of both appreciation and depreciation, with the most recent phase starting in March 2025 showing a surplus in foreign exchange settlements despite ongoing trade tensions [2][4]. - The average settlement rates for foreign exchange have varied significantly over the years, reflecting changes in market sentiment and external economic pressures [3][4]. Market Behavior and Bank Strategies - The willingness to purchase foreign exchange has decreased, while the motivation to sell has increased, indicating a shift in market dynamics [4]. - Banks have adjusted their foreign exchange positions in response to market conditions, acting as liquidity buffers in the foreign exchange market [9][10]. Financial Positioning and Asset Management - By the end of Q1 2025, the private sector's net foreign position turned positive for the first time, indicating a significant increase in foreign financial assets [7][8]. - The article notes that banks have been increasing their foreign exchange positions, which is seen as a rational response to market conditions, rather than speculative behavior [12][14].