What Exchange Rate to Use for Company Account USD Conversion? Unveiling the Rules and Impacts

At What Exchange Rate Is USD Converted in Corporate Accounts? Exploring the Mechanism and Its Impacts

In today’s increasingly globalized economy, cross-border trade, investment, and settlement have become routine aspects of business operations. For companies maintaining U.S. dollar accounts or frequently engaging in foreign exchange transactions, the question of at what exchange rate USD is converted is not only a matter of financial cost but also directly affects profit margins and capital security.

Recently, with increased volatility in the RMB-USD exchange rate, more and more companies are paying attention to the mechanisms behind forex transactions. Against the backdrop of frequent economic interactions between China and the United States, choosing the right timing for currency conversion and understanding the exchange rate standards used by banks have become critical issues for corporate decision-makers.

I. The Basic Process of Dollar Conversion in Corporate Accounts

Corporate foreign currency accounts-such as USD accounts-are typically used for receiving international payments from overseas clients or making payments to global suppliers. When a company needs to convert USD funds into RMB, it must go through a bank to perform a foreign exchange settlement.

In practice, after submitting a conversion request via online banking or at a branch, the bank will execute the transaction based on the real-time exchange rate. However, this real-time rate is not the same as the central bank's mid-price often seen in news reports. Instead, it reflects the buying and selling rates set by the bank according to its internal pricing mechanism.

II. Types of Exchange Rates and Their Applicable Scenarios

Currently, several types of exchange rates are involved in corporate foreign exchange settlement

1. Central Bank Mid-Price PBOC Benchmark Rate

This official reference rate is determined by market supply and demand and compiled from quotes by multiple market makers. While not directly tradable, it serves as a foundation for many financial institutions when setting their own prices.

2. Bank Listed Rates

Major commercial banks adjust the central bank’s benchmark up or down by certain spreads to set their own buy/sell rates and cash rates. Companies generally use the spot-buying rate or cash-buying rate when converting USD to RMB.

3. Real-Time Market Spot Rate

For enterprises with higher treasury management needs, some banks offer real-time FX quotes based on the interbank market. These allow companies to transact at prices close to actual market levels during specific periods.

It’s worth noting that exchange rates can vary across different banks and even within the same bank at different times. For example, in August 2025, ICBC, Bank of China, and China Merchants Bank showed differences of over RMB 0.05 per USD in their spot-buying rates. While such discrepancies may seem negligible in small-scale conversions, they could result in tens of thousands of yuan in gains or losses for large-volume transactions e.g., millions of USD.

III. Factors Influencing Exchange Rate Selection

When converting USD, companies do not rely solely on one fixed rate; rather, the selection is influenced by multiple factors

Bank Pricing Strategies Large state-owned banks tend to maintain stable rates, while joint-stock banks may adjust spreads to attract clients.

Transaction Timing Exchange rates during regular working hours are usually more favorable than those around holidays or month-end/quarter-end periods, when banks may tighten spreads.

Customer Tier and Service Agreements High-value clients or those with strategic cooperation agreements may enjoy preferential rates.

Use of Derivative Instruments If companies use forward contracts or swaps to lock in exchange rates, their transaction prices won’t be affected by daily fluctuations.

In early September 2025, the State Administration of Foreign Exchange issued a notice encouraging banks to optimize and streamline corporate FX services, aiming to improve transparency. This suggests that companies will gain greater control and access to information regarding exchange rate choices in the future.

IV. How Should Enterprises Manage FX Risk?

Amid a complex and volatile exchange rate environment, companies should take the following measures

1. Establish a Robust FX Management System

Develop clear conversion plans to avoid impulsive decisions driven by short-term uncertainty.

2. Monitor Exchange Rate Trends Closely

Utilize professional financial platforms or bank research reports to stay informed about macroeconomic trends and USD movements.

3. Leverage Financial Instruments Flexibly

As mentioned, tools like forward contracts and options can help lock in exchange rates and mitigate exposure to volatility.

4. Maintain Strong Communication with Banks

Proactively understand bank policies and negotiate better rates or customized services where possible.

V. Case Study A Real-Life Example from an Export Enterprise

Consider a Guangdong-based electronics exporter that received a USD 500,000 payment from a U.S. client in July 2025. Initially, the finance team planned to settle the amount immediately upon receipt. However, given that the USD/CNY rate was temporarily low at around 7.26, the finance department advised delaying the conversion.

One month later, the Federal Reserve signaled a dovish stance, leading to a decline in the U.S. dollar index. The RMB appreciated to approximately 7.15. By converting at this point, the company earned about RMB 55,000 more than originally expected. This case illustrates how strategic timing and a good understanding of exchange rate trends can significantly impact corporate financial performance.

Conclusion

The exchange rate applied in corporate USD account conversions is not standardized-it depends on the bank’s pricing model, current market conditions, and the enterprise’s own trading strategy. In today’s complex and dynamic global economic environment, companies must enhance their understanding and control of foreign exchange markets to operate more effectively in cross-border financial activities.