RMB Exchange Rate Volatility Exacerbates China's Foreign Trade Exports

In recent days, RMB Against US dollar exchange rate The median price continued to rise, reaching a record high in the 27 day. In the past more than a month, the spot price of RMB against the US dollar has become lower than the middle price, and has even appeared for several consecutive days.

"Touch the bottom" not long ago, began to "touch high", which makes China foreign trade The expected depreciation of the renminbi in the export sector has just been broken. Many companies lament that the recent fluctuation of RMB exchange rate is likely to continue. Next year, it is likely to continue, and then the situation of "little increase or amplitude" will lead to the worsening export situation. How to change from customary "one-way appreciation" to "two-way fluctuation" becomes the "first big test" for foreign trade export enterprises.

　 Increasing amplitude and narrowing the RMB exchange rate to usher in a new stage

"The current fluctuation of foreign exchange is really disoriented, especially the recent RMB exchange rate." Analysis of foreign exchange in the latest month market Xu Feng, director of International Business Department of Zhuhai Hansheng Polytron Technologies Inc, is responsible for the balance of payments of enterprises.

It is not surprising that businesses feel this way. Looking back in 2011, the RMB remained stable against the US dollar in the middle price until November, which broke even a number of barriers and showed a unilateral appreciation.

However, starting from 30 in November, as the offshore market in Hongkong saw empty Renminbi and led to the demand for foreign exchange purchase in the territory, the spot quotation of RMB against the US dollar was lower than that of the central parity, which has become normal. Unilateral appreciation of the situation is not a small "reverse".

The 12 "limit down" makes enterprises feel that the RMB should be devalued periodically. Beginning in December 26th, the central parity of RMB against the US dollar closed to a record high in November 4th. The 27 day was a record high in the intraday exchange rate reform.

From "touch bottom" to "touch up", the market believes that the expectation of the RMB exchange rate phased devaluation is over in the wake of the US dollar index callback, the emergence of the end of the year settlement plate, the purchase of China's national debt and other factors, and the enhancement of confidence and demand in the international market for RMB.

"It is expected that the appreciation rate will not be large in 2012, but the amplitude will continue at the end of 2011 and continue to increase. In other words, small fluctuation intensifies, but the exchange rate interval decreases with the large cycle. In other words, the direction of the RMB exchange rate is not so clear, which may have an impact on the real economy and increase the difficulty of investment. Xiao Yaofei, deputy director of the international economic and Trade Research Center of Guangdong University of Foreign Studies, said.

Zhao Qingming, an expert on international financial issues, also believes that from the trend, the two-way volatility of RMB exchange rate will become stronger and stronger in the future. The exchange rate formation mechanism of our country emphasizes "managed floating", and the trend of future exchange rate is hard to judge.

　　 Exchange rate changes aggravate foreign trade enterprises' difficulties

However, it is this slight increase in volatility that makes China's foreign trade face more severe challenges.

Professor Xiao Yaofei, who has long studied the relationship between international finance and China's foreign trade and export, said that the previous stage of "lower renminbi" is indeed beneficial to export enterprises. "But for some foreign trade enterprises and foreign-funded enterprises who want to gain profits and share double earnings, I am afraid that such fluctuations have brought about great losses. In the future, the foreign trade enterprises also want to try to gain profits from foreign exchange speculation.

In fact, even if they do not engage in foreign exchange investment, most foreign trade enterprises have felt that they need to readjust to the new stage of the RMB exchange rate which is "small and large."

Wang Donglei, chairman of Guangdong de Hao run Da electric Limited by Share Ltd, said that the aggravation of the amplitude directly affected the bargaining power of Chinese enterprises. "In the case of a more obvious expectation of a one-way appreciation, we have difficulty in negotiating big purchase prices such as WAL-MART and Carrefour. Now that the amplitude is increasing, the other party is more reluctant to acknowledge our expectation of appreciation, and the difficulty of negotiation will only increase."

The characteristics of two-way volatility are more obvious, which makes many foreign trade enterprises feel that the difficulty of using financial instruments to avoid risks is further increased. Xu Feng said, with Hansheng technology as an example, although enterprises have adopted export credit insurance, forward selling and foreign exchange and other tools to avoid exchange rate risk, but in general, "at present, banks have very few tools, some of them are too complicated to avoid product design, and we are usually afraid to use them, let alone foreign currency fluctuations make people feel at a loss, and even more afraid to use them."

"For the magnitude of exchange rate fluctuations, we hope that half a year will not exceed 3%, and it is gradual, and too many enterprises can not afford it. Now the foreign customers we are dealing with are most concerned about the exchange rate in China's economy. GREE electric chief financial officer Wang Jingdong said.

　 How can China's foreign trade enterprises make profits in the two-way fluctuation era?

China's foreign trade enterprises generally realize that the exchange rate issue involves many factors, and how to adjust itself to cope with the increasingly obvious characteristics of "two-way volatility" is the urgent topic that must be considered in 2012.

Some enterprises have adopted "primitive" means to safeguard their own interests. Zhang Zhonghan, deputy general manager of Shenzhen Wan run technology director, said that the company has basically returned to the cash trading stage, "pay first and then deliver", and immediately settle the foreign exchange to avoid losses. "Because enterprises mainly run LED products with high added value, they have relatively strong bargaining power."

But most enterprises still need to rely on financial instruments to avoid risks. Xiao Yaofei said that from the perspective of enterprise operation, "little increase or amplitude" means that enterprises should continue to increase the application of tools such as hedging and forward settlement and sale of foreign exchange. "Although two-way fluctuations lead to greater difficulty in forecasting, enterprises should be more cautious when using these tools, but it is better to use them than not to use them." this is a basic principle.

At present, GREE electric, Senna technology, de ho run, Hansheng technology and other enterprises have set up full-time posts to judge the trend of the renminbi and avoid risks with various financial instruments. However, enterprises appeal to banks and other financial institutions to provide more and more flexible exchange rate risk aversion tools to adapt to the new situation.

In the view of some foreign businessmen, China's foreign exchange policy and monetary policy should be adjusted appropriately if China's foreign trade enterprises can better adapt to the "two-way fluctuation" era.