The Risk Of Abandonment And Breach Of Contract In The 30 Billion Textile Market!

Turkish Lira once plummeted by 16%! Brazilian real devalued by 40%!

Lira once plummeted 16%, Turkey raised interest rates to 19%!

In order to stop the US $1.9 trillion "flood", on March 18, Turkey's central bank announced an interest rate increase of 200 basis points to 19% to control inflation rate of nearly 16% and devaluation of lira.

However, Turkey's central bank governor Alba's frequent interest rate hikes have angered Erdogan, who advocates cutting interest rates. As a result, the iron fisted president announced the removal of the hawkish president in the early hours of Saturday local time, which was the third time Erdogan suddenly replaced the central bank president since mid-2019.

In less than five months since he took office, the Turkish central bank raised interest rates by 875 basis points to 19%, regaining some policy credibility, and the lira rebounded from its low point. Now that he has been removed, investor confidence has collapsed and is immediately reflected in the lira exchange rate.

Leuchtmann of Commerzbank of Germany believes that the lira will depreciate to 8.75 US dollars by the end of 2021, about 10% lower than the current level. The lira has closed down for eight consecutive years, with a decline of more than 10% in most years.

Customers line up outside a money exchange shop in Istanbul, Turkey

Some regulations of Turkish customs have been used by bad buyers in Turkey for many years. If exporters are not careful, they will be in a passive position. Therefore, the recent export to Turkey, please pay attention to the safety of payment!

Brazil prices skyrocketed! Currency devalued seriously!

Brazil's food prices soared 16% from January to November 2020, according to the National Geographic Bureau of statistics. As staple food, Brazil's rice and black beans rose the most, 70% and 40% respectively. The imported inflation of the US dollar has caused a real disaster to Brazil. We can see that since January 2020, the exchange rate of the US dollar in Brazilian real has soared all the way, and the passive depreciation of the Brazilian currency has reached nearly 40%.

At the same time, according to the latest statistics of Brazil's National Geographic Statistics Bureau, in 2020, Brazil's gross domestic product (GDP) fell by 4.1% year-on-year, more than - 3.5% in 2015, a new low since the adoption of the existing GDP statistical methods in 1996.

In other words, Brazil's overall economy will shrink in 2020, and the cash in Brazil's hands has fallen by 40%, suffering from inflation, and prices have risen to ridiculous levels.

Brazil can't hold on, announce interest rate increase!

Brazil's central bank on Wednesday raised the selic target rate by 75 basis points to 2.75%, the first increase since 2015. The central bank's policy committee also said it would raise the ceric rate by another 75 basis points at its meeting in May unless inflation expectations and risk balance change significantly.

Market expectations of interest rate hikes in India, South Korea, Malaysia and Thailand are rising, and a new round of interest rate hikes is coming. For many emerging market countries, not only do they have to face their own economic recovery in the post epidemic crisis era, but the greater difficulty is the imported inflation brought about by the strong recovery of the US economy, which is very difficult for many emerging market countries.

30 billion textile market abandonment risk surge!

Affected by the epidemic situation, inflation, exchange rate fluctuations, H & M cotton incident, political turmoil and other factors, Brazil's export default is frequent, and this kind of "intermediary default cases" began to appear at the beginning of the year. It is suggested that exporters should avoid signing contracts with Brazilian middlemen. At the same time, the special policies of Brazilian customs and the very strict requirements for customs declaration documents make Brazilian customs one of the most stringent customs in the world.

In 2020, the total value of Brazil's imports of China's goods is 241.65 billion yuan, including 19.94 billion yuan of textile imports; the total value of Turkey's imports of Chinese goods is 140.98 billion yuan, including 10.8 billion yuan of textile imports. The textile market of the two regions is more than 30 billion yuan, involving a large number of domestic textile enterprises. But now the two countries' currencies have depreciated substantially, which has virtually increased the export prices of China's textiles. In particular, some of the fabric products that have just arrived in Hong Kong are likely to face the situation of customers' default and cancellation of orders. In addition, the fabric orders currently being made and under discussion may also be delayed or cancelled due to the devaluation of the customer's currency.

Freight forwarders who have trade with ports in these countries and regions in the near future should pay attention to the risk control of collection and delivery, and guard against the problems of customs clearance at the destination port, no pick-up at the destination port, buyer abandonment and non payment.