RMB Devaluation, Textile Plate Or Will Be Concerned By The Market

Judging from the trend of RMB exchange rate, it has been in a state of shock in recent years. The last round of devaluation cycle started in early 2018 and ended in 2020. RMB / US dollar fell from 6.28 to 7.13, and the main devaluation period was from the beginning of 2018 to the beginning of 2019. But from May 2020, the RMB exchange rate has entered the orbit of steady appreciation, which has lasted until March this year.

However, since April 19 this year, the RMB exchange rate has been rapidly devalued, continuously falling through several barriers. Although the central bank announced on April 25 that it would reduce the foreign exchange reserve ratio of financial institutions by 1 percentage point in response to the depreciation of the exchange rate, this reduction did not stop the pace of exchange rate depreciation. After entering may, RMB in the onshore market depreciated rapidly again after a short-term market closure. On May 12, the onshore RMB exchange rate against the US dollar fell by more than 800 basis points, and the lowest once fell to 6.82, breaking the new low of this round of adjustment.

The sharp depreciation of RMB exchange rate will benefit export-oriented enterprises with more overseas business. The export industry is usually labor-intensive enterprises and mechanical equipment industry, such as foreign trade, textile and clothing, auto parts and household appliances. These industries are basically industries with high export dependence, Among them, the textile clothing industry is the main industry.

After good exports, it will often lead to good shipping, and may even stimulate the demand for raw materials and drive the dry bulk transportation market. However, due to the epidemic situation and other factors, the overall performance of shipping has declined.

In the A-share market, due to the investment habits formed over the years, the market generally believes that textile, clothing and household appliances are the most sensitive industries to the depreciation of RMB exchange rate. Taking the textile and garment industry as an example, the overall gross profit level of the textile and garment industry is relatively low, and the export share is relatively high, so the extra exchange income has a more obvious marginal effect on the net profit of related companies.