RMB Less Than 6.9 Yuan, Wenzhou Leather Industry Is Difficult To Continue

Since the reform (including the day), the appreciation of RMB against the US dollar has also exceeded 20% for the first time, reaching 20.09%.

The road of appreciation in the past three years has strengthened China's ability to resist inflation and financial crisis, and has also stimulated the rapid inflow of hot money, and has brought some impact to some export enterprises.

The Vietnamese government lowered the Dong Dong exchange rate at 2% for one time. In May, the currencies of many Asian countries depreciated significantly against the US dollar. The central banks of South Korea, India, Philippines and other countries were forced to sell the US dollar to intervene in the foreign exchange market.

Recall that the depreciation of the currency led by the Thai baht 10 years ago triggered a massive withdrawal of capital from the Southeast Asian market, and worries over the outbreak of the financial crisis shrouded the whole of Asia.

Since the two quarter, the RMB has appreciated by 1.8% against the US dollar, and the appreciation rate of RMB is the highest among the 10 most liquid currencies in Asia except Japan.

The exchange rate of RMB against the US dollar rose from 1:8.2765 before the reform to 20.09% yesterday.

The yuan has appreciated 5.99% against the US dollar this year.

The steady rise of the RMB exchange rate is an important guarantee to prevent the flow of hot money and foreign exchange funds. It is also one of the reasons why China is not likely to have a financial crisis.

The RMB is still on the rise, the economic development structure is more healthy and reasonable, and China's economic competitiveness continues to be optimistic.

In the first two years when Vietnam's local currency exchange rate was obviously undervalued, Vietnam did not decisively revalue. Instead, it adopted a large number of measures to offset foreign exchange appreciation pressure, resulting in excess liquidity and eventually inflation.

In view of this, the reform of exchange rate formation mechanism opened by China in July 2005 may help China to avoid similar financial turmoil to a certain extent.

In the second half of last year, the outbreak of the subprime crisis accelerated the depreciation of the US dollar, thus driving up the price of oil, grain and raw materials all over the world and bringing serious threat of imported inflation to Vietnam and other emerging market countries.

In the second half of last year, China began to pay attention to the effect of appreciation on the suppression of imported inflation. Taking the policy of volume tightening and interest rate increase, the initiative to accelerate the appreciation rate has played a certain role in easing domestic inflation pressure.

The appreciation may reduce the risk of China's outburst of inflation and financial crisis.

The game between the RMB and the US dollar has lasted for nearly three years. The motive of the us to exert pressure on the renminbi is to reduce the US trade deficit with China. The root of China's allowing the appreciation of the renminbi is to reduce liquidity pressure and adjust the structure of economic growth.

With the appreciation of RMB against the US dollar at 20%, the advantages and disadvantages of the appreciation have gradually become clearer.

Before the reform, some scholars expect the RMB to appreciate 10% against the US dollar, and a large number of export enterprises will go bankrupt.

At present, China's foreign trade industry has obviously exceeded its expectation of appreciation. China's trade surplus in May still exceeds 20 billion dollars.

The growth of processing trade, which accounted for half of the surplus, has slowed down significantly since the beginning of this year.

The profit margins of many textile enterprises in the southeast coast have dropped to below 3%.

Once the largest leather industry in the country is difficult to continue, Wenzhou is now heavily in the process of coal mining.