Appreciation Of RMB: Textile People Should Not Bet On RMB Appreciation Or Devaluation

Data from the China foreign exchange trading center showed that the central parity rate of the RMB against the US dollar was 6.4030 on May 27, up 69 basis points from the previous day.
Recently, the RMB exchange rate has come out of a wave of appreciation, especially since April, the RMB exchange rate against the US dollar has been rising all the way.
Kang Chongli, director of YueKai Securities Research Institute, believes that at present, the growth of China's import amount mainly comes from the rise of overseas commodity prices. If the RMB continues to appreciate in the future, it is expected that the increase in the unit price of bulk commodities will slow down or even decline, thus weakening the import inflation caused by the rise of commodity prices and the cost pressure faced by China's import enterprises.
Some people are happy and others are worried about the appreciation of RMB
We are pleased with the import enterprises. The stronger RMB is good for import enterprises. Wen bin, chief researcher of Minsheng Bank, believes that the appreciation of RMB exchange rate will reduce the purchasing cost of import enterprises and increase profits. In particular, at present, the prices of some commodities continue to rise sharply, and the prices of some varieties have reached new highs, and the import costs of raw materials of enterprises have increased. Therefore, the appreciation of RMB will also alleviate the pressure brought by the soaring prices of commodities. ?
The worry is for export enterprises. RMB appreciation is not conducive to export. Because the cost of export products increases, which will affect the competitiveness of export enterprises in the international market, there will also be exchange rate risk, resulting in exchange loss. The appreciation of RMB, combined with the rise of raw materials and shipping prices, has a greater impact on exports and will further reduce the profits and living space of small and medium-sized foreign trade enterprises.
Engaged in textile foreign trade at this time really feel the appreciation of RMB brought about by the loss of loans, especially our textile foreign trade. Because there is a huge time difference between the quotation of fabric products and the return of payment for goods, it often takes 3-4 months for quotation, production and delivery, and the payment can only be paid in 2-4 months after customers receive the goods.
It is obviously unlikely that the exchange rate at the time of quotation and the exchange rate for collection will remain unchanged for half a year, especially since RMB has been in the trend of appreciation in the past two years. Any time the offer will feel low after a few months.
The sample fee is not paid and the payment is delayed
For a long time, foreign trade customers have always been the fragrant steamed buns in the eyes of textile people. The most important point is that compared with some domestic customers, foreign trade customers tend to pay for goods in a timely manner, and there are few cases of delayed deduction.
According to a person in charge of a textile enterprise, before 2015, they mainly made domestic orders. In the normal business process, it is common for them to receive payment deduction, delay or even non payment. Up to now, domestic customers still have about 4 million loans, which are basically not coming back. After 2015, the company turned to foreign trade, and its customers were mainly Vietnam, Bangladesh, India and other underdeveloped countries. Although these countries are relatively backward and poor, there is almost no arbitrary deduction and non payment on the payment of goods, unless it is the problem of order making.
Foreign trade customers have always had a good impression on textile people. It is precisely because of this that enterprises from home compete for foreign customers at every foreign exhibition. However, the good payment methods of foreign trade customers have changed under the impact of the epidemic last year.
According to the person in charge of a foreign trade enterprise in Jiangsu and Zhejiang, he basically gave up the orders from Indian customers this year because the price of the order was too low, and the profit per meter of cloth was only about 1 yuan, and he was still in arrears.
Foreign trade enterprises also have problems in payment for goods. An important reason is that the epidemic hit the downstream garment enterprises greatly last year, and even many clothing brands have closed down. As a result, traders undertaking garment orders can not settle the payment, and naturally they lack funds to pay the upstream fabric enterprises.
Deposit production, delivery with money popular
Under the epidemic situation, there are not many orders, but if the remaining orders still have payment problems, then the impact on textile enterprises is quite huge.
"We do outdoor fabrics, and only do foreign trade. The exchange rate is also a big blow to us. We have a lot of orders that are quoted at the exchange rate of 7 and collected at 6.5. In view of the tense epidemic situation in Europe and the United States and the risk of late payment and exchange rate are too high, we decided to implement 30% down payment for production and 70% delivery for all customers, which can perfectly avoid the risk of exchange rate and payment default. If the customer doesn't accept it, we'd rather not accept the order than lose the principal. " Said a textile trader.
Some foreign trade customers are breaking the good impression they have left in the past, and the domestic fabric suppliers will naturally change their trading methods, especially the payment methods.
Of course, not only foreign trade, but also customers are quietly changing.
Recently, some textile enterprises have made it clear that they will take delivery of goods with money, which is of great significance to break the previous "credit sale" mode. At present, in the weaving Market, loan delivery and credit sale still coexist. However, the price paid by the weaving factory to the two payment methods is often lower than that by credit. Even if the cash is a new customer and the credit sale is an old one, after all, the safety of payment for goods is higher than everything else.
Reminder: don't bet on RMB appreciation or devaluation, long-term bet will lose!
Recently, the seventh working conference of the self-discipline mechanism of the national foreign exchange market proposed that a managed floating exchange rate system based on market supply and demand, adjusted by reference to a basket of currencies, is suitable for China's national conditions and should be adhered to for a long time.

Under this exchange rate system, the exchange rate can not be used as a tool, neither can it be used to stimulate exports by devaluation, nor can it be used to offset the impact of rising commodity prices by appreciation. The key is to manage expectations well and resolutely crack down on all kinds of malicious manipulation of the market and malicious creation of unilateral expectations.
The meeting held that the current foreign exchange market is generally balanced. In the future, there are many market and policy factors affecting the exchange rate. RMB may appreciate or depreciate.
No one can accurately predict the trend of the exchange rate. Whether it is short-term or medium-term or long-term, uncertainty of exchange rate is inevitable, and two-way fluctuation is normal.
The meeting stressed that enterprises and financial institutions should actively adapt to the two-way fluctuation of exchange rate. Enterprises should focus on the main business, establish a "risk neutral" concept, avoid risk neutral "foreign exchange speculation" behavior, do not bet on the appreciation or depreciation of the RMB exchange rate, long-term bet will lose.
The impact of the continuous appreciation of RMB
Market participants believe that in the current cycle of rising commodity prices, the appreciation of RMB is conducive to hedging the pressure of rising commodity prices. At present, the growth of China's import amount is mainly driven by the rise of overseas commodity prices. Under the continuous appreciation of RMB, the cost pressure faced by import and export enterprises will be weakened.
In terms of export, in the short term, if the RMB continues to appreciate, it will lead to the weakening of domestic commodity export advantage. However, at present, the domestic epidemic situation is best controlled in the world. The repeated epidemic situation in Europe and the United States and other economies and the setback of global supply capacity repair will continue to boost China's exports or offset the impact of currency appreciation.
Of course, there are also views that the continuous appreciation of the RMB is equivalent to increasing the import cost of overseas markets from China, which will affect domestic exports, thus increasing the supply of domestic commodities, which is conducive to the work of maintaining the supply and price of domestic bulk commodities.