The exchange ratio is a metric used in foreign trade practice to measure the RMB cost required for each unit of foreign currency earned by an export enterprise, or the RMB income corresponding to each unit of foreign currency spent. It is usually expressed as a 'RMB/foreign currency' ratio, for example 7.2, meaning that 1 USD of income requires 7.2 RMB of cost. This term is commonly used in export profit and loss accounting, quotation decisions, and profit analysis. It is closely related to 'exchange cost' but from the opposite perspective: exchange cost is the 'cost per USD of export', while the exchange ratio is the 'amount of RMB exchanged per USD'. Usage scenarios include: comparing the foreign exchange earning efficiency of different orders, assessing the impact of exchange rate fluctuations on profits, and setting foreign quotations. Note: the exchange ratio must be calculated comprehensively in conjunction with the bank's buying rate/selling rate, tax rebate income, freight and insurance, etc., and varies greatly among enterprises due to differences in tax rebates and expense structures. Unlike the 'exchange rate', the exchange ratio is an internal accounting indicator, not a market exchange rate, and cannot be used directly for external settlement.
📝 Examples
1. The exchange ratio for our batch of goods is 7.15, while the current bank USD buying rate is 7.10, indicating that for every 1 USD earned we actually lose 0.05 RMB, so we need to renegotiate the price or cut costs. (Used for export profit and loss analysis, showing the exchange ratio compared with the bank exchange rate to determine losses.)
2. The finance department requires that the exchange ratio for all export orders be no less than 7.30, otherwise approval will not be granted, so salespeople must include tax rebates and domestic expenses in the calculation when quoting. (Used for internal corporate risk control, illustrating the exchange ratio as a hard indicator for order approval.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
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