Renminbi Rose To A New High In Two Months To See The Recent Impact On Cotton Import Prices

With the confirmation of the thirteenth round of consultations between the two sides in early September and the conclusion of the first stage, the RMB ended the trend of rapid depreciation, showing a slight appreciation since September 4th. Yesterday, the intermediate price rose to a new high of 7.0617 in the past two months. Today it is 7.0582 higher than that in September 3rd, which is 0.4% higher than the low 7.0884 in September 3rd.

Since late October, the 1% tariff gap between domestic and foreign cotton has gone into an upside down state. The slide rate has been expanded to more than 1000 yuan per ton. In addition to the recent rapid rise in cotton prices, the relative low level of RMB after the early devaluation is also an important reason. The devaluation trend of RMB is favorable for export, but it increases the price of the imported dollar denominated goods converted into RMB. The starting point of the above round of depreciation was 6.8938 in August 1st, the lowest in September 3rd, and 7.0884 in the September 3rd. The same price was 75 cents per pound, and the 1% tariff was RMB 12749 yuan / ton to 13103 yuan / ton. The devaluation factor led to an increase of 354 yuan / ton in import cotton price and a price increase from 14178 yuan / ton to 14393 yuan / ton, up by 215 yuan / ton. Since September 4th, the appreciation of the renminbi has played a role in the decline in import prices, but the scope is limited. The same 75 cents / pound of outer cotton increased to today's middle price, and the tariff rate of the outer cotton 1% decreased to 13048 yuan / ton, compared with that in September 3rd, it dropped by 55 yuan / ton, and the sliding tax price dropped to 14358 yuan / ton, down 35 yuan / ton.

Due to the recent easing of Sino US trade situation and the continued appreciation of RMB, it is hard for the industry to return to more than 7. Therefore, the effect of lowering the import cost of foreign cotton is rather limited. But as domestic cotton prices pick up, the difference between inside and outside cotton prices is expected to return to the positive range.