1. Report Industry Investment Rating - No information provided on the industry investment rating in the report 2. Core Viewpoints of the Report - In February, the foreign exchange market continued the late - January trend of a stronger US dollar and an even stronger RMB. The central parity rate of the RMB strengthened continuously, and the on - shore trading price appreciated faster. Attention should be paid to the negative impact of the appreciation on export enterprises [2][3] - Affected by the Spring Festival holiday, cross - border capital inflows continued to slow down, but the capital inflow under the goods trade item remained at a record high for the same period, continuing to play a leading role in cross - border capital flows. Capital under the securities investment item turned into a net outflow, and the decline in the scale of overseas holdings of domestic RMB bonds narrowed [2] - The gap between domestic foreign exchange supply and demand narrowed significantly month - on - month in February, which was related to the accelerated appreciation of the RMB and the weakened willingness of the market to settle foreign exchange. However, the willingness of market participants to settle foreign exchange in the spot and forward markets remained relatively strong, and the motivation to purchase foreign exchange was relatively weak, with the bank's foreign exchange settlement and sales surplus still at a high level [2] - To prevent the possible financial impact of RMB appreciation on export enterprises, it is necessary to continuously guide enterprises to further increase the proportion of RMB invoicing in cross - border trade [2] 3. Summary by Relevant Catalogs 3.1 Foreign Exchange Market Trends - At the end of February, the intensification of the geopolitical situation in the Middle East caused the US dollar index to rise, ending three consecutive months of decline. Against this background, the RMB exchange rate continued its appreciation trend. The central parity rate of the RMB strengthened continuously, and the on - shore RMB exchange rate trading price appreciated at an accelerated pace, reaching new highs [3] - On February 25th and 26th, the accelerated appreciation of the on - shore RMB exchange rate was accompanied by an increase in foreign exchange trading volume, indicating the emergence of a pro - cyclical herd effect. On February 27th, the central bank adjusted the foreign exchange risk reserve ratio for forward foreign exchange sales, causing the RMB exchange rate to slightly correct, but it still appreciated by 1.35% compared to the end of the previous month [4] - In February, the deviation of the "three prices" of the RMB exchange rate slightly increased. The on - shore spot exchange rate was stronger than the central parity rate for the third consecutive month, and the average daily deviation increased. The offshore spot exchange rate was generally stronger than the on - shore spot exchange rate, and the average daily deviation also increased [4] - The average value of the on - shore spot exchange rate rose for the sixth consecutive month. The average values of the spot exchange rate with a 3 - month and 5 - month lag increased for the twelfth and tenth consecutive months respectively, reaching new highs [5] - In February, the RMB exchange rate index rebounded. The CFETS RMB exchange rate index, the RMB exchange rate index referring to the BIS currency basket, and the RMB exchange rate index referring to the SDR currency basket all rose, reaching new highs [5] - The nominal effective exchange rate index of the RMB continued its appreciation trend since August 2025, and the real effective exchange rate index continued its upward trend since July 2025, narrowing the cumulative decline in the real effective exchange rate of the RMB since April 2022 [5] 3.2 Cross - border Capital Flows - In February, the surplus of banks' foreign - related receipts and payments on behalf of customers decreased from $82.1 billion in the previous month to $35.6 billion, but it was still a record high for the same period. The surplus of foreign - currency foreign - related receipts and payments decreased, and the deficit of RMB foreign - related receipts and payments increased [11] - Under the goods trade item, the surplus of foreign - related receipts and payments decreased month - on - month, mainly due to a larger decrease in foreign - related income than in expenditure. However, both foreign - related income and export volume under the goods trade item were at record highs for the same period, with year - on - year growth [12] - Under the securities investment item, foreign - related income ended three consecutive months of growth, and the item turned into a net outflow. The scale of foreign - related income and expenditure remained at a high level, indicating high activity of cross - border capital under the securities investment item. The holdings of domestic RMB bonds by overseas institutions continued to decrease, but the decline significantly narrowed [17] 3.3 Domestic Foreign Exchange Supply and Demand - In February, the bank's spot and forward (including options) foreign exchange settlement and sales had a surplus for the twelfth consecutive month, and the surplus scale narrowed for the second consecutive month but was still at a relatively high level. The average daily surplus scale also decreased [21] - The surplus of banks' foreign exchange settlement and sales on behalf of customers decreased, the net forward and option foreign exchange settlement scale decreased, and the deficit of banks' own foreign exchange settlement and sales increased [21] - After excluding the forward performance amount, the exchange settlement rate of foreign exchange receipts decreased for the second consecutive month, and the exchange purchase rate of foreign exchange payments increased slightly. The exchange settlement rate was at a new high for the same period in the past three years, and the exchange purchase rate was at a new low for the same period in the past four years [24] - The cumulative outstanding net forward foreign exchange settlement amount on behalf of customers by banks increased for the eighth consecutive month, reaching a record high. The forward foreign exchange settlement demand was relatively strong, and the forward foreign exchange purchase demand further weakened [24] 3.4 Special Topic: Increasing the Proportion of RMB Invoicing - The appreciation of the RMB may have a negative impact on export enterprises. From the perspective of the exchange gains and losses of non - financial listed companies in the A - share market, in years when the RMB exchange rate appreciated significantly, many listed companies suffered exchange losses [34] - There is a common misunderstanding that RMB settlement is equivalent to RMB invoicing. Even if an enterprise uses the RMB for cross - border settlement, if there are foreign - currency - denominated receipts, payments, assets, or liabilities, it may still face exchange rate risks [35] - According to statistics, the proportion of RMB invoicing in cross - border trade in Russia and Mongolia is relatively high, but in other countries and regions, the proportion is significantly lower. The average proportion of RMB invoicing in exports and imports in all countries and regions in the dataset in 2023 was far lower than that of the US dollar and the euro [36] - It is estimated that the proportion of RMB invoicing in China's cross - border trade in 2023 was about 10%, significantly lower than the RMB settlement share. The current policy goal is to maintain the basic stability of the RMB exchange rate, and it is necessary to guide enterprises to increase the proportion of RMB invoicing in cross - border trade [38] - Financial institutions should adhere to the principle of "giving priority to the domestic currency", provide comprehensive RMB financial services to foreign - trade enterprises, and improve the convenience of cross - border RMB use. Enterprises should also enhance their industrial competitiveness to support the continuous increase in the proportion of RMB invoicing [39]