China’s State Administration of Foreign Exchange (SAFE) has issued informal window guidance to banks to encourage corporate clients to increase foreign-exchange hedging, as a stronger yuan pressures exporters’ earnings. Local SAFE branches have urged lenders in export-oriented coastal regions to raise client hedging ratios to around 40% or higher, while banks in areas with weaker trade activity were asked to move toward the national average. Some branches have subsidized part or all of the premiums for companies’ currency options. The yuan has appreciated 4.3% against the dollar this year and is trading near its strongest level in roughly four years. Corporate foreign-exchange derivative contracts reached approximately $1.4 trillion in the first half of the year, up about 40% from a year earlier, while the nationwide hedging ratio rose to 35.3%, up 5.3 percentage points from the end of last year. Goldman Sachs estimated first-half foreign-exchange losses at about 70 billion yuan, or approximately $10.4 billion, equal to roughly 4% of total corporate profits and the largest level in a decade. The measures come as weak domestic demand leaves exports, including high-tech and artificial-intelligence-related products, as a key support for China’s economy. Rising currency-market volatility linked to tensions surrounding Iran could keep hedging demand elevated, even as markets expect the yuan’s appreciation to slow.