Some Chinese exporters hasten US dollar conversion amid trade war
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The onshore yuan has clawed back some of its losses this month as doubts over US exceptionalism pummelled the dollar.
PHOTO: AFP
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HONG KONG – Some Chinese exporters are speeding up conversion of their US dollar income into renminbi on bets that the worst of the tariff-led loss in the local currency may be over.
In a Bloomberg survey of 18 Chinese exporters in April, all of them said they had already converted, or will immediately switch, their greenback holdings into the renminbi, as they see the current renminbi exchange rate of around 7.3 per dollar as favourable.
Companies in sectors ranging from furniture and ceramics to decorative lighting, gardening and garments were interviewed at the Canton Fair in Guangdong province earlier in the month. They had an annual export revenue ranging from US$10 million (S$13 million) to US$300 million.
Exporters’ move to switch out of the greenback is in contrast to their strategy since late 2024 of hoarding dollars on concern that US tariffs on China will weaken the renminbi. Those bearish renminbi wagers may have already played out as the currency fell to the weakest level since 2023, following Washington’s move to impose tariffs of as much as 145 per cent on Chinese goods in April.
“The (renminbi) is unlikely to fall much further as a 145 per cent US tariff is the worst thing; nothing will be worse than this,” said Mr Albert Zhai, chairman of Aroma International Trade, an exporter of Halloween decorations, based in China’s northern province of Liaoning.
The renminbi fluctuating around 7.25 to 7.35 per dollar is beneficial for the company’s cross-border trade, he added.
The onshore renminbi has clawed back some of its losses in April as doubts over US exceptionalism pummelled the dollar.
The renminbi rose by as much as 0.2 per cent in both onshore and offshore markets to around 7.27 on April 29, the strongest since early April.
Still, the renminbi remains the third worst-performing currency in Asia in 2025, behind the Indonesian rupiah and the Hong Kong dollar. It is also near a 21-month low against a basket of its trading partners’ currencies.
Renminbi weakness is providing an opportunity for exporters that were holding out on converting their dollar proceeds to finally act.
The cash could come in handy at a time when higher tariffs skim margins, raising the demand for funds to purchase raw materials and pay salaries.
“Chinese exporters may intend to reduce FX exposure given the low visibility of FX trends, shifting away from FX hoarding in the prior year,” Mr Ken Cheung, chief Asian foreign exchange strategist at Mizuho Bank, wrote in a note, referring to foreign exchange.
The exporters surveyed said the People’s Bank of China will not allow the renminbi to weaken too much. China has defied forecasts for currency devaluation to bolster exports, instead opting to smooth out any market volatility via the daily reference rate for the renminbi.
Beijing vowed to provide more support for exporters affected by US tariffs on April 28 as it laid out plans to ensure troubled firms get the loans they need and boost domestic consumption. BLOOMBERG
