On June 27, the RMB fell to 6.5569 yuan against the US dollar, a decrease of 389 basis points from 6.5180 yuan on the 26th. The RMB has been devalued for several consecutive days, not only hitting a new low this year, but also the largest devaluation since January 9, 2017.
(USD and RMB trend chart: from Sina Finance)
As shown in the chart above, the depreciation trend of the RMB has lasted for more than ten days.
(from Sina Finance)
As shown in the chart above, as of 15:40 pm on the 28th, the price of the US dollar against the RMB was still rising. It can be seen that the US dollar index has no downward trend and the depreciation of the RMB is still continuing.
Why did the RMB suddenly depreciate in consecutive days? One of the main reasons is related to the previous RRR cuts taken by my country’s central bank. After the Federal Reserve raised interest rates some time ago, my country’s monetary policy not only failed to adjust accordingly, but also took measures such as RRR cuts to release currency into the market, increasing the liquidity of the RMB. , causing the monetary policy cycle to be misaligned, making RMB assets less attractive. Coupled with the intensifying Sino-US trade friction and the strong rise of the US dollar index, the RMB exchange rate eventually fell continuously.
So in the face of this round of abnormal changes in the RMB exchange rate, what do textile foreign trade companies that are greatly affected by the exchange rate think about this? The author conducted an investigation and inquiry on several textile foreign trade companies in Shengze area.
At the same time, Mr. Wu, who is mainly engaged in textile foreign trade business in Southeast Asia, said: “We have several foreign trade orders in Southeast Asia on hand, because foreign trade orders It is denominated in foreign currency. Now that the RMB has depreciated, it means that the revenue from our original orders will increase when converted into RMB, which means that the profit will become higher. Moreover, after the RMB depreciates, we will have more advantages in accepting orders internationally. It can be said that our competitiveness will be improved.”
It can be seen from the above that for companies engaged in textile export business, the depreciation of the RMB will not only enhance their international competitiveness, but also It also increases revenue from existing orders.
When will the U.S. dollar index rise? When will the RMB depreciate again?
Some experts believe that the rise in the US dollar since mid-April is a technical rebound and has not entered a “structural bull market.” The dollar’s rebound is losing momentum.
Some experts also believe that due to the impact of Sino-US trade frictions and the domestic economic downturn, the US dollar index will remain strong and the pressure for RMB depreciation will continue to exist.
The author believes that we should maintain a neutral attitude towards the U.S. dollar at present. After a period of time, the U.S. dollar will lack momentum to rise, and the RMB will not continue to depreciate. Because changes in the RMB exchange rate will greatly affect the final revenue of companies’ foreign trade orders, and the RMB exchange rate continues to fluctuate, and no one knows the future exchange rate, textile companies should be cautious in accepting orders at present.
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