RMB Appreciation Is Expected To Weaken After "Full Moon".

A month ago, the people's Bank of China announced that it should further promote the reform of the RMB exchange rate formation mechanism.

In July 16th, China's Foreign Exchange Trading Center released the renminbi against the US dollar.

Ma Jun, chief economist of Greater China in Deutsche Bank, said that from the analysis of China's economic fundamentals and international and domestic factors, the floating of the RMB exchange rate will pay more attention to the role of a basket of currencies, and the US dollar exchange rate will also have more two-way fluctuations, rather than the trend of unilateral appreciation like 2005 to 2008.

Meanwhile, with the emergence of the euro zone debt crisis and the emergence of the US dollar hedging function, China also showed some signs of capital outflow and slowed down the yuan.

In addition, UBS predicts that at least initially, the yuan will strengthen against the US dollar.

In the future, the renminbi will not appreciate substantially against the US dollar, especially considering that the euro has depreciated considerably against the US dollar.

According to the research report released by JP Morgan, it is expected that the RMB will rise to 6.6 against the US dollar at the end of the year, and China will pay more attention to exchange rate flexibility.

China's monetary policy is expected to focus more on flexibility and pertinence in the future, so as to maintain steady economic growth.

Supplement:

The global financial crisis, which began in 2008, slowed down the pace of exchange rate reform in China, narrowed the fluctuation of the RMB exchange rate and even implemented the "pegging" US dollar strategy.

And two years later, in June 19th, the central bank resumed the work of RMB remittance.

From the current point of view, the pace of RMB appreciation has begun to take off. In the second trading days after the central bank reiterated the exchange rate reform, the RMB against the US dollar hit a new high in the past 5 years.

This has to arouse our concern about the development of the industry.

At this stage, China's textile industry is in a critical period of increasing cost pressures and weak production and investment recovery. The revaluation of the RMB will undoubtedly bring greater negative impact on the industry.

It is estimated that the export recovery of China's textile and clothing products will slow down in the second half of the year.

In our analysis, we have repeatedly pointed out that the appreciation of the renminbi will further weaken the export competitiveness of the entire textile and garment industry, and accelerate international orders to Vietnam, India, Pakistan and other neighboring countries. Not only will China's textile export enterprises suffer losses such as the decrease in export settlement, the decline in corporate profits and the loss of export orders, but also will affect the ability of the industry to absorb social employment.

Although the export recovery rate of China's textile industry is still relatively fast at present, but judging from the reasons for the growth of the current industrial exports and the pressure it faces, we believe that at present, industry exports are growing rapidly on the basis of low export base in the same period last year, and the rapid performance of their export recovery is not sustainable.

First of all, the demand power of the international market is not sustainable, and the real demand recovery has not yet been formed, and when will the replenishment power continue to become the industry's concern.

Through the brutal inventory process during the financial crisis, the inventory compensation is inevitable in the process of economic recovery.

Strong demand for inventory compensation in developed economies such as the US and Europe has become an important driving force for the export of China's textile industry at this stage.

According to the US Department of commerce data, the US business inventories grew by 0.39% in 2010 and 0.51% in the manufacturing sector in April, but the two data showed a slowdown.

The consequent reduction of the positive pulling effect on China's textile and clothing exports will also become inevitable.

The European debt crisis, Japan's economy is still sluggish, and US retail data unexpectedly slipped in May, which has become an important concern for us when the real demand for the international market will resume.

Secondly, the pressure on the cost of raw materials is too high. Although some export products have partially released the excessive upward pressure on the price of raw materials through the way of raising product prices, the pressure brought about by the unsynchronized price pmission is very limited.

According to the relevant data, by June 23rd, China's 328 grade domestic cotton has risen to 18089 yuan / ton, up 21.57% compared with the beginning of 2010.

According to China's customs data, in April 2010, the price of textile yarn exported by China increased by 5.88% compared with January this year, and the price of textile fabrics increased by 7.77% compared with January this year.

It can be seen that the cost pressure problem of textile enterprises is very prominent at present.

In addition, the current industry development is also faced with problems such as shortage of labor resources, rapid increase in labor costs, rising fuel power costs, and uncertainties in international trade environment.

At the moment, we have ushered in the reform of the RMB exchange rate, which will undoubtedly cast a shadow over the prospects for the recovery of the industry's exports.

Here, we need to remind the textile exporting enterprises to diversify their export markets, speed up the pace of product innovation and development, actively increase the added value of products, and choose financial instruments to avoid trade risk, so as to guard against the consequent trade risks.