Application of USD to RMB in Cross-border Payment

Ⅰ. USD to RMB Exchange Rate Trend

The USD to RMB exchange rate in 2024 was characterized by two-way fluctuations, with more pronounced exchange rate fluctuations throughout the year, but the RMB remained basically stable against a basket of currencies. The yearly low was 7.0106 (September 26th) and the high was 7.2970 (December 3rd).

In the first half of the year, China's PMI and other economic data were weak. It led to increased market expectations of RMB easing, while the US dollar remained strong, boosted by strong non-farm employment data and inflation data. After entering June, the seasonal dividend buying of Hong Kong stocks further pressured the RMB exchange rate, and the USD/RMB exchange rate continued to rise from 7.24 to a high of 7.28. Entering the second half of the year, the RMB exchange rate rebounded as US economic data retreated and China's policy adjustments were made. The market traded around events such as macro policies, trade frictions and the US election, which led to frequent fluctuations in the US dollar exchange rate.

A number of financial institutions predicted that the USD-RMB exchange rate will remain oscillating in the game of “fiscal relief” and “tariff increase” The USD-RMB exchange rate will fluctuate in the range of 7.10 to 7.35 in 2025, but may break through to 7.40 in the case of intensified trade friction. under increased trade friction, it may break through to the 7.40 to 7.50 range.

You can visit XTransfer currency exchange platform to provide you with the most up-to-date USD to RMB exchange rate information.

 

Ⅱ. Factors affecting the USD to RMB exchange rate

 

Categories	Factors
Economic fundamentals	1. Macroeconomics: When the economy is strong, demand for money increases and the exchange rate rises. The opposite leads to a fall in the exchange rate. 2. Trade surplus/deficit: RMB appreciates when there is a surplus and depreciates when there is a deficit. 3. inflation rate: high inflation usually leads to currency depreciation.
Monetary policy	1. interest rate differential: the interest rate differential between China and the US affects capital flows, with higher interest rates usually attracting foreign capital and pushing the exchange rate up. This usually has central bank intervention to adjust monetary policy.
International Market Factors	1. Change in the US Dollar Index: A stronger US Dollar usually leads to a depreciation of the RMB and vice versa. 2. Global economic environment: Financial crisis, geopolitical risks, etc. can affect exchange rate fluctuations. The exchange rate is also a timely reflection of the external environment.
Market Sentiment and Speculation	1. Speculation: The behavior of speculators can lead to short-term exchange rate fluctuations. 2. Market expectations: market expectations of economic prospects, policy changes can affect exchange rate fluctuations.

 

Ⅲ. USD to RMB Channels

In cross-border payments, USD to RMB (US Dollar to Renminbi) is widely used and covers a wide range of scenarios and platforms.

1. Application of online cross-border payment platforms

XTransfer: XTransfer is a platform that provides cross-border collection services for cross-border e-commerce B2B enterprises, supporting the collection of USD, EUR and other currencies as well as the conversion of RMB, which helps SMEs to complete cross-border payments efficiently.

Airwallex (Airwallex): Airwallex provides global cross-border payment solutions, supporting original currency crediting and currency exchange in multiple currencies such as USD, EUR and JPY. Enterprises can make cross-border collections, currency conversions and international payments through this platform, which supports B-side enterprises and e-commerce sellers.

PingPong: PingPong is a payment platform focusing on cross-border e-commerce collections, supporting transactions in more than 50 currencies, including the U.S. dollar, and mainly serves sellers on e-commerce platforms such as Amazon, eBay, and Wish. Users can exchange their US dollar income to RMB through PingPong with low handling fee, the transaction rate is usually 1%.

2. Bank Live Internet Banking

The CIPS system is an important infrastructure for RMB cross-border payment, supporting RMB cross-border settlement without relying on the SWIFT system.The CIPS system improves cross-border payment through the remittance guide, payment lens. Mirror and other functions, it improves the efficiency and transparency of cross-border payment, and is widely used in international trade, financial transactions and other fields. Traditional channels, such as bank counters are available for direct mutual exchange of RMB and USD with ID cards. Many banks' mobile apps allow users to complete foreign exchange purchase operations on their cell phones, providing greater convenience.

 

Ⅳ. What are the applications of USD to RMB in B2B cross-border payments?

B2B is a particularly important form of cross-border payment. To learn more about this payment method, you can read this article. To learn about B2B payment strategies, you can read this article. USD to RMB is mainly used in the following aspects in this scenario:

1. International Trade Settlement

In international trade, enterprises usually use USD as the main transaction currency, but with the advancement of the internationalization of RMB, more and more enterprises start to choose to settle in RMB. This can not only reduce the risk of exchange rate fluctuations, but also improve the efficiency of capital turnover

2. Banking and financial services

Enterprises can choose to move their funds in either USD or RMB when raising funds across borders. This flexibility enables enterprises to better manage their cash flow and financing costs. In addition, Bank of China has released a cross-border e-commerce B2B digital RMB application solution to explore improved cross-border payment experience

3. Offshore RMB accounts

Foreign trade enterprises involved in RMB transactions can open offshore RMB accounts outside China in order to conduct RMB transactions directly. This approach can reduce the impact of foreign exchange control and improve the efficiency of capital utilization.

 

Ⅴ. How to deal with USD to CNY exchange rate fluctuations and avoid unnecessary losses?

In B2B cross-border payments, exchange rate fluctuations between the U.S. Dollar (USD) and the Chinese Yuan (CNY) can cause losses for businesses. In order to minimize these losses, businesses can adopt a variety of strategies to effectively deal with exchange rate risks.

1. Timely collection and currency conversion

Enterprises should try to ensure that they are able to complete collections and currency conversions in a timely manner when the market is volatile. This will avoid exchange rate losses due to delayed transactions. For example, assuming that the enterprise is expected to receive 1,000 U.S. dollars, if the exchange rate is more favorable in a timely manner to convert into RMB, you can effectively avoid losses caused by the decline in the exchange rate.

2. Open multiple foreign currency accounts

Opening multiple foreign currency accounts can help reduce the impact of exchange rate fluctuations. By receiving payments directly in foreign currencies, companies can avoid frequent currency exchanges, thus reducing losses due to inappropriate timing.

3. Choosing the right payment channel

Enterprises should make a good choice of payment channel. This is super important to avoid unnecessary losses. When choosing a cross-border payment platform, enterprises should prioritize those service providers with lower handling fees and higher payment efficiency.

4. Utilize exchange rate hedging tools

For large transactions, enterprises can utilize exchange rate hedging tools. These tools can help to reduce the risk of exchange rate fluctuations.

5. Cross-border RMB settlement

This is a commonly used method in cross-boarder transaction. Through cross-border RMB settlement, enterprises can further reduce foreign exchange risk. This is a good way to reduce the risk of foreign exchange fluctuations and simplify the settlement process and improves payment efficiency.

6. Regular Audit and Compliance Management

Enterprises should conduct regular internal audits and compliance management. By identifying and resolving these issues in a timely manner, companies can reduce financial losses arising from compliance risks.