The Continued Appreciation Of The Renminbi Has Increased The Risk Of Foreign Trade And The Setback Of Clothing Exports.

The RMB exchange rate, which has been devalued for more than 5 months, has suddenly soared after the National Day holiday and has hit a new high since the reform.

Yesterday, the spot exchange rate of RMB against the US dollar hit 6.2372 in intraday, hitting a new high in nearly 19 years.

In a few short weeks, the RMB has shifted rapidly from the sustained depreciation to the US dollar, and the market has been heated up by the accelerated appreciation.

In the context of the continued appreciation of the renminbi, exchange rate fluctuations have increased the risk of exchange between individuals and enterprises. Many foreign trade enterprises in Zhongshan have said that this has increased the risk of foreign trade and is affecting the foreign trade in the middle of warming up.

Agricultural products processing and other industries.

RMB soaring

From September, the spot exchange rate of RMB against the US dollar began to continue to strengthen and reestablish its 6.30 integer pass. After the National Day golden week, the RMB continued to show an accelerated appreciation trend. In mid October, the spot exchange rate of the US dollar exceeded RMB 6.28, which broke the key point for the first time in nearly 19 years.

After a number of trading days touched down on the limit, yesterday, the renminbi's spot rate against the US dollar hit a record high of 6.2372, but the rally eased.

Multiple factors stimulate the influx of hot money

The market also gave various explanations for the sudden appreciation of RMB.

However, the industry generally believes that the sudden sharp appreciation of the RMB in the short term is mainly due to the start of the new round of quantitative easing policy in the US, and the US dollar index continues to decline, resulting in the general passive appreciation of non US currencies.

There is also a view that the rise of the renminbi is driven by the influx of hot money.

Jiang Lin, director of Finance and taxation department of South of the Five Ridges College of Zhongshan University, thinks that Europe and America are loose currencies.

A large influx of capital has been pouring into Hongkong through the mainland and continues to pour in.

For this round of hot money offensive, the China Foreign Exchange Trading Center yesterday said that the impact of quantitative easing policy on major economies in the world continued. In general, the pattern of RMB exchange rate continued to rise in the near future has not changed significantly. But in the long run, the RMB appreciation against the US dollar will continue to be limited, and the exchange rate should be dominated by a large two-way fluctuation.

Despite the recent sharp rise in the yuan against the US dollar, which has repeatedly touched the price limit, the central bank's central parity has been maintained near 6.30, indicating that the central bank does not want the renminbi to continue to rise sharply against the US dollar.

Many foreign trade enterprises are caught off guard.

The momentum of the RMB exchange rate rebound has been rapid, making many individuals and foreign trade enterprises unprepared.

Zhongshan Customs said that the appreciation of the renminbi would have a greater impact on the export oriented industries with high foreign currency assets.

Textile and clothing, agricultural products processing and other industries, low value-added, profits are thin, and most vulnerable to the appreciation of the renminbi.

Take the textile industry as the example.

It is understood that the RMB profit per appreciation of 1%, the textile industry sales profit fell by 2%-6%.

After the appreciation of the renminbi, the cost of the enterprise is raised, and the profit is reduced or lost, which has a great impact on exports.

In this regard, many garment enterprises have indicated that the appreciation of the renminbi has great impact on enterprises.

"A change in exchange rate has a great impact on the profits of enterprises.

In the past, exports generally had a profit of 10%, "said Zhang Xiang, general manager of Zhongshan courier Garments Co. Ltd." the garments exported to the United States are basically settled in US dollars. "The exchange rate of the people has increased again and again, resulting in a continuous decline in our profit margins."

He said that the list of exports is usually long, and if exported at the end of the year, there will be a loss in the garments exported now. "If the RMB is settled, it will be better."

Whether orders can pick up is still uncertain.

For foreign trade enterprises, the continued depreciation of the renminbi can stimulate more export orders, which is particularly important in the first three quarters of this year when foreign trade continued to slump. Recently, with the rise of foreign trade orders, the appreciation of the renminbi has risen to a certain extent, making it possible for foreign trade orders to continue to pick up in the future.

"We have been used to working in a stable exchange rate or a unilateral market environment for many years."

Shi Jie Jun, general manager of Zhongshan Huan Wei industry, said that in April, the two-way fluctuation of RMB against the US dollar and the expansion of its scope had puzzled the enterprises in pricing and avoiding risks in a certain period.

He said that the appreciation of the renminbi at this stage is related to the two-way fluctuation of exchange rate, which makes it even more difficult to judge the trend of the future market, which is a new challenge for many export enterprises.

The head of oceanic Motor said that the appreciation of the renminbi can only be a factor affecting the decision of enterprises. "Through hedging and other means, we can effectively hedge risks."

Yang Kaiqing, brand director of evergreen new oasis, also said that the brand enterprises have certain advantages in the quotation. The appreciation of the renminbi will have a smaller impact on the enterprises. "However, foreign trade settlement is still carried out in US dollars, which will have a certain impact on exports."

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Financial advice

Frying dollars is better than frying Australian dollars.

For individuals, people who bought dollars at the time when the RMB exchange rate continued to go down appeared a loss, and those who remained reluctant to accept the pressure of RMB depreciation became the biggest beneficiaries in a flash.

In this regard, financial executives said that the RMB exchange rate changes are too many factors, especially after the exchange rate fluctuations further amplified, it is very difficult to accurately judge the short-term trend. "For Chinese investors in the long term, RMB assets are still the most suitable investment type, because China's economy is at a low level, and there are still many opportunities for the future."

Zhongshan financial intelligence management center experts said that although the growth rate of China's economy in the next 3-5 years can support the long-term appreciation of RMB, the economic situation, especially the foreign trade situation, remains unclear for half a year.

In regard to foreign currency investment, Zheng Kaishan, a financial advisor of China Construction Bank, said, "if you want to make some foreign exchange investment, the best investment is not Australian dollars but Australian dollars.

At present, the Australian dollar is at a historic low level and has undergone a long period of volatility consolidation between 1.02- 1.06. Investors in short-term operations can sell high in this region.

For foreign trade enterprises, she suggests using the hedging tools such as forward sales and settlement to lock in the exchange rate risk.

And Mr. Lin, a financial planner of ICBC, suggests that the US dollar assets are already in place.

We should choose to stay put, but for investors who need to go abroad or trade, it should be a good time to buy dollars.