Core Viewpoint - The continuous appreciation of the RMB against the USD is putting pressure on export companies, particularly in low-value-added industries like steel, where pricing sensitivity is high [1][2][6]. Exchange Rate Trends - As of February 27, 2026, the offshore RMB/USD exchange rate reached 6.8528, while the onshore rate was 6.8559, marking a significant appreciation since early 2025 [1]. - The RMB has appreciated over 1400 basis points since early 2025, with the onshore rate fluctuating but generally trending upwards [2][3]. Impact on Export Companies - Exporters are facing challenges in pricing due to the rapid appreciation of the RMB, which affects profit margins on existing orders [1][2]. - Companies are adjusting their pricing strategies to mitigate potential losses from exchange rate fluctuations, with some opting to quote lower rates to remain competitive [2][3]. Central Bank Actions - The People's Bank of China announced a reduction in the foreign exchange risk reserve ratio for forward sales from 20% to 0%, effective March 2, 2026, aimed at supporting companies in managing exchange rate risks [1][5]. - This policy change is expected to lower costs for financial institutions and encourage more companies to utilize hedging tools to manage currency risk [5]. Export Performance - Despite the RMB appreciation, China's export performance remains strong, with a total trade value of 45.47 trillion yuan in 2025, reflecting a 3.8% year-on-year increase [6]. - The correlation between RMB appreciation and export performance is low, indicating that the Chinese economy is becoming less sensitive to exchange rate fluctuations [7]. Future Outlook - Analysts suggest that the RMB is currently in a balanced range, with various factors influencing its future movements, including potential U.S. monetary policy changes and the overall economic environment [8]. - Seasonal trends may lead to fluctuations in the RMB exchange rate, with expectations of a slight appreciation over the year despite potential short-term volatility [8].