Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 163

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 11
Chunk 163
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to interest rate risk primarily relates
to the interest rates for capital leases, rental installment loans and other financing arrangement, and bank borrowings. The interest
rate risk may result from many factors, including government monetary and tax policies, domestic and international economic and political
considerations, and other factors that are beyond our control. We may incur additional borrowings or other facilities in the future. Significant
increases in interest rates may have an adverse impact on our earnings if we are unable to source rental apartments with rental rates
high enough to offset the increase in interest rates for the rental installment loans, capital leases and other financing arrangement,
and bank borrowings.

The sensitivity analysis below has been determined
based on the exposure to interest rates for interest bearing bank balances and other borrowings with variable interest rates as of September
30, 2024. The analysis is prepared assuming that those balances outstanding as of September 30, 2023 and 2023 were outstanding for the
whole financial year. A 10% increase or decrease which represents the management’s assessment of the reasonably possible change
in interest rates is used. Assuming no change in the outstanding balance of our existing interest bearing bank balances and other borrowings
with variable interest rates as of September 30, 2024, a 10% increase or decrease in each applicable interest rate would add or deduct
nil to our interest expense in FY 2024.

This analysis does not consider the effects of
the reduced level of overall economic activity that could exist in such an environment. In addition, in the event of a change of such
magnitude, we would consider taking actions to mitigate our exposure to the change. However, because of the uncertainty of the specific
actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure. We have
not used any derivative financial instruments to manage our interest risk exposure.

Foreign Exchange Risk

The value of Renminbi against the U. S. dollar and other currencies
may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted
by the PRC government. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U. S. dollar.
Following the removal of the U. S. dollar peg, the