{"url_path":"/sec/hiho/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Quantitative and Qualitative Disclosures About Market Risk.**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-14","source_url":"https://www.sec.gov/Archives/edgar/data/1026785/0001213900-26-077959-index.html","accession_number":"0001213900-26-077959","cik":"0001026785","ticker":"HIHO","issuer_name":"HIGHWAY HOLDINGS LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1026785/0001213900-26-077959-index.html","primary_entity_key":"0001026785","primary_entity_name":"HIGHWAY HOLDINGS LTD"},"word_count":539,"has_tables":true,"body_markdown":"** **\n\n**Item 11. Quantitative and Qualitative Disclosures About Market Risk.**\n\n \n\nThe Company sells most of its products in U.S.\ndollars, Hong Kong dollars, and in Euros. Because the exchange rate between the Euro, the U.S. dollar and Hong Kong dollars fluctuate,\nthe Company experiences currency exchange gains and losses. Although the exchange rate between the U.S. and Hong Kong dollar has fluctuated\nslightly, such fluctuations have not had a material impact on the Company.\n\n \n\nThe Company conducts all of its manufacturing and\nassembly operations through its PRC operating subsidiary and through its majority-owned Myanmar subsidiary. The financial performance\nand position of the PRC subsidiary are measured in terms of Renminbi, and all of the operations of the Myanmar subsidiary are denominated\nin Kyat. All of the Company’s costs of manufacturing in the PRC, including its labor costs, are incurred, and paid, in Renminbi,\nand all costs in Myanmar are paid in Kyat. Any appreciation in the value of the renminbi or Kyat against the U.S. dollar would consequently\nhave an adverse effect on the Company’s operating costs and on its financial performance when measured in terms of U.S. dollars.\n\n \n\n58\n\n \n\n \n\nThe Company has not engaged in currency hedging\ntransactions to offset the risks associated with variations in currency exchange rates. Consequently, significant foreign currency fluctuations\nand other foreign exchange risks may have a material adverse effect on the Company’s business, financial condition and results of\noperations. The Company does not currently own any market risk sensitive instruments. The Company does not hedge its currency exchange\nrisks and, therefore, will continue to experience certain gains or losses due to changes in foreign currency exchange rates. The Company\nhas, however, attempted to limit its currency exchange rate exposure by (i) requesting that more of the payments made by its clients be\npaid in U.S. dollars, and (ii) including in certain of its OEM contracts a contractual provision that adjusts the payments the Company\nreceives if the currency exchange rate changes significantly.\n\n \n\nThe Company’s exposure to interest-rate risk\nprimarily relates to the interest rates on its outstanding debt compared to the interest income it generates on its excess cash. The Company\nmaintains its excess cash in short-term interest-bearing deposits (that are subject to interest rate fluctuations). The Company had $569,000\nlong-term borrowings that are subject to interest rate changes as of March 31, 2026. Because the Company had cash and cash equivalents\nof approximately $4,409,000 available as of March 31, 2026, and no interest-bearing indebtedness, the Company believes that its interest\nrate risk is acceptable.\n\n \n\nInflation in China has not materially affected\nour results of operations. Inflation on a year-over-year basis in China has been 0.2% in calendar year 2023, 0.2% in 2024 and 0.2% in\n2025. Inflation in the PRC has modestly increased the Company’s cost of operations at its manufacturing facility in the PRC. Continued\nincrease in inflation could have an adverse effect the Company’s costs and margins in the PRC. Inflation on a year-over-year basis\nin Myanmar has been 14.18% in calendar year 2023, 26.5% in 2024 and 22% in 2025. Although the inflation rate in Myanmar has increased\nthe Company’s cost of labor in Myanmar, those increases have to date been offset by the continued weaking of the Kyat."}