Central Bank To Raise Interest Rates Footwear Exports Into A "Black Hole"

On the last trading day of June, the exchange rate of RMB against the US dollar increased by 19 basis points compared with last Friday, breaking the 6.86 mark.

The central parity of RMB against the US dollar was 6.8591 yuan, a record high of fiftieth in the year.

Zhou Xiaochuan, governor of the Central Bank of China, said on Monday that raising interest rates is still an option to combat inflation, despite the worry of speculative capital inflows.

He said that the central bank has many options when using monetary instruments, including open market operations, central bank bills, deposit reserves and so on.

Raise interest panic again

Zhou Xiaochuan said yesterday that China will gradually expand the flexibility of the RMB exchange rate.

"Inflation is a global phenomenon. The rise in energy and food prices has an impact on the world. The central bank needs to apply monetary policy to deal with it."

When asked whether there is room for adjusting interest rates against inflation in China, Zhou Xiaochuan said that everything is possible, and he does not rule out any possibility.

Zhou Xiaochuan also said that hot money is only one factor that plagued China's economy.

It is reported that RMB has appreciated 6.4950% against the US dollar this year.

Compared with the previous exchange rate reform, the increase has reached 20.6645%, which is the fastest half of RMB appreciation.

But with the accelerated appreciation of the renminbi, the pressure on the domestic economy has begun to increase dramatically.

Based on the principle of gradual, stable and controllable RMB exchange rate reform, some experts believe that the RMB exchange rate can not continue to accelerate appreciation.

Peng Xingyun, director of the monetary theory and Monetary Policy Office of the Chinese Academy of Social Sciences, said that with the cumulative effect of costs, the acceleration of the export slowdown will reduce the possibility of sustained rapid appreciation.

Appreciation effect is obvious.

Tan Yaling, a special researcher at the Financial Derivatives Research Institute of Peking University, said that China's current exchange rate supervision department's perception of the international exchange rate market is straight rather than curve.

The unilateral appreciation momentum that has been shown has great risks, which is against the market rules and beyond the scope of China's economy.

Tan Yaling said, in his personal investigation, "6. 5" is already the life and death line of the RMB to the US dollar which the state-owned export enterprises can bear.

Although the line of life and death is not yet available, the survival of small and medium-sized enterprises and private enterprises is facing a crisis.

According to Guangzhou customs statistics, in the -5 months of January this year, only 2331 footwear enterprises in the Pearl River Delta region were reduced, compared with the same period last year. At present, 2428 are in the Pearl River Delta region. Nearly half of the PRD footwear export enterprises have no export achievements this year.

Related research shows that nearly 50% of textile, clothing, shoes and hat manufacturers can tolerate the appreciation rate of RMB below 2% (2%).

In addition, foreign capital is also surging inward due to the expanding channels of profit from RMB appreciation.

As of the end of May, China's total foreign exchange reserves amounted to US $1 trillion and 797 billion.