Trade Survival Guide in a Volatile Currency Market

Date：2025-12-19 15:37:10

Recently, the movement of the Renminbi (RMB) exchange rate has captured significant attention in the global market. Over the past month, the USD/RMB rate has experienced notable fluctuations, marking the highest volatility seen in the past six months. This “currency dance” is driven by a confluence of factors, including signs of recovery in China’s domestic economy, shifting expectations regarding foreign monetary policies, and seasonal corporate demand.

Exchange rate fluctuations act like a double-edged sword, subtly redrawing the profit and loss contours for businesses engaged in international trade. For all parties involved, staying alert and responding proactively has never been more critical.

---

To Export Enterprises: Enhance Risk Awareness and Take the Initiative

An appreciation of the RMB directly increases the US dollar price of Chinese goods, which may affect price competitiveness and erode profit margins when converting foreign currency receipts. In response to this volatility, consider the following approaches:

1. Strengthen Exchange Rate Risk Management: Integrate currency risk management into strategic planning. Proactively engage with financial institutions to utilize tools such as forward contracts and options to hedge exposure and secure predictable costs.

2. Refine Quotation and Contract Strategies: For long-term orders, consider implementing shorter quotation validity periods or incorporating exchange rate adjustment clauses into contracts. This allows for sharing potential currency risk with customers.

3. Focus on Value Enhancement: In the long run, moving up the value chain through product innovation, brand building, and service improvement is the most sustainable way to build resilience against exchange rate movements.

To Overseas Buyers: Plan Ahead and Secure Costs

If a sustained appreciation of the RMB is anticipated, proactive procurement strategies can help manage future costs and ensure supply chain stability.

1. Core Rationale: Lock in Costs Early: Before further exchange rate moves, negotiate medium to long-term fixed-price contracts with reliable exporters. This strategy essentially acts as a hedge against rising future costs.

2. Adjust Procurement Cadence: Based on your sales forecasts and storage capacity, consider moderately increasing order sizes or adopting an “annual framework agreement with scheduled deliveries” model to consolidate cost advantages.

3. Deepen Supplier Collaboration: Demonstrate commitment to long-term partnership and optimize payment terms (e.g., offering a higher deposit) to encourage exporters to agree to fixed pricing, fostering a more stable and cooperative relationship.

---

Building More Resilient Trade Partnerships

Bidirectional exchange rate volatility is a constant feature of the global economy. Neither exporters nor importers can fully shield themselves in isolation. The most effective path forward is fostering partnerships grounded in mutual understanding and collaboration.

Both parties can jointly explore more flexible settlement methods (such as experimenting with RMB denominated contracts), discuss fair risk-sharing mechanisms, and smooth out volatility through enhanced communication and aligned planning.

Developing a robust yet adaptable risk management framework is becoming a core competency for participants in global trade. It is through such preparedness that all parties can navigate the waves of change with confidence, ensure steady progress, and achieve sustainable, shared success.