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Lu Jun runs an audio product company in Shenzhen. 90% of this company’s orders are export orders, mainly going to Europe, the United States, Japan and South Korea.
Since the epidemic, due to China’s resumption of work and production Obviously faster than the world average, demand for many audio products is flowing to China. The company’s warehouse is filled with products that are about to be shipped. As the New Year approaches, everyone is working overtime and busy. Lu Jun told reporters that their orders have been scheduled until the end of April this year.
“Customer orders are pouring in, and the delivery period is basically three months later. In 2020, orders have increased by about 100%.”
Although the order volume has increased sharply, their income is not as generous as expected. The main reason is the recent sharp appreciation of the RMB.
“Around October 8, 2020, we opened our U.S. dollar account and saw that the exchange rate dropped from 6.80 to 6.60 overnight. For us, hundreds of thousands may have evaporated.”
Li Hongxi is also troubled by the rising exchange rate. His company is engaged in cross-border e-commerce business. He is worried about paying wages to his employees these days because there is not much RMB left in the company’s books.
On May 27, 2020, the offshore RMB exchange rate against the US dollar began to “counterattack” from the year’s low of 7.1954, and this momentum will continue after entering 2021 Still haven’t stopped. On the first working day of the new year, the central parity rate of RMB against the US dollar was reported at 6.5408; on January 11, the central parity rate of RMB against the US dollar was reported at 6.4764. Li Hongxi calculated that if he exchanged 100,000 US dollars now, he would lose 70,000 to 80,000 yuan compared with last June.
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Guaranteed profits for foreign trade companies to survive in response to changes
Foreign trade companies often produce domestically, and orders come from overseas. They receive U.S. dollars, but purchase materials and labor expenses in RMB. As the exchange rate continues to rise, foreign exchange exchange has become a profit-eating thing. How to reduce the impact of exchange rate on profits? Foreign trade companies each have their own “tricks.”
△CCTV Finance “Economic Information Broadcast” column video
In addition to adjusting the order price to hedge the exchange rate In addition to risks, some foreign trade companies have also changed the timeliness of order quotations, shortening it from the previous one year to half a year or even three months. Although this may lead to a weakening of customer confidence in the company, with such drastic exchange rate fluctuations, ensuring profits has become a top priority.
In addition, some companies also We are working hard to change the payment model and pay suppliers of raw materials and other materials in US dollars to avoid losses caused by foreign exchange exchange.
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Exchange rate hedging tools are of concern and foreign trade companies are in urgent need of financial talents
Changes in exchange rates have led to a significant reduction in corporate profits, but price increases will sharply reduce the competitiveness of products. Financial instruments that can stabilize exchange rate fluctuations have become a good choice at this time. How useful can these “financial tools” be in practical applications? Can it really help these foreign trade companies?
△CCTV Finance “Economic Information Broadcast” column video
It is understood that many banks There are foreign exchange service products that can help companies avoid exchange rate risks. Some banks said that as the RMB exchange rate rises, more and more companies come to consult on exchange rate risk management business. They hope to lock in the foreign exchange settlement rate as soon as possible to reduce the foreign exchange settlement losses caused by the rapid appreciation of the RMB.
Strong exports have also spawned more imports and exports Enterprises’ exchange rate hedging needs. Currency lock is the most common operation currently used by import and export companies to deal with exchange rate fluctuations.
Yang Delong, chief economist of Qianhai Kaiyuan: “Foreign trade companies generally use forward exchange rate contracts to hedge against fluctuations in forward exchange rates. Because it may take a while for many companies to receive payments, but it is unpredictable how the exchange rate will fluctuate in the future.”
However, it is understood that there are still many small foreign trade companies that do not conduct exchange rate hedging.
Li Hongxi, the person in charge of an e-commerce company in Shenzhen: “I don’t know about foreign exchange locks. After all, we are a cross-border e-commerce company. Products are sold to consumers one by one. Orders Come back together again�It’s not traditional foreign trade. Without large-volume orders and FOB (free on board), we don’t have such a thing. ”
In addition to not finding it helpful, Many companies are also worried that the use of financial instruments may affect the company’s cash flow.
Cao Zhifeng, CEO of a technology company in Shenzhen: “We are also talking with banks, including T+1, locked exchange, because enterprises are facing cash flow problems, so far, this part is not very helpful. We mainly seek understanding from suppliers and clients. ”
Some companies also expressed that they greatly need the help of financial instruments to avoid exchange rate risks. However, due to the lack of professional talents, companies will be helpless in specific operations.
Lu Jun, chairman of a Shenzhen technology company: “If there are talents in this field, they can give us some guidance and conduct some feedback directly in the foreign exchange market. Directional operations, or options operations, may be more beneficial to us, and this is also a lesson we need to make up for next. ”
What is the impact of the sharp appreciation of the RMB?
For ordinary people, the appreciation of the RMB means The money in your hand is more valuable, and it will be more cost-effective if you travel, study, and shop abroad. Because the same money can be exchanged for more US dollars, and you can buy more goods and services.
Exchange US$100,000 to save more than 30,000 yuan
You can do a simple calculation: the central parity rate of RMB against the US dollar on May 29 was 7.1316, and on September 16 it was 6.7825. From 7.1316 to 6.7825, if you exchange 100,000 US dollars , it required 713,160 yuan at that time, but only 678,250 yuan today, which can save 34,910 yuan. Experts said that for residents, the appreciation of the renminbi is conducive to overseas travel, overseas shopping, and study abroad, reducing overseas consumption costs and increasing the number of consumers. benefits. At the same time, international investors are optimistic about China’s capital market, and the continued net inflow of international funds will also help domestic residents hold RMB assets and maintain sustained and stable returns on assets.
Good for imports, bad for exports
For companies, the strengthening of the RMB against the US dollar is good for importing companies, but will bring certain pressure to exporting companies. Experts analyze that from the perspective of import companies, the appreciation of the RMB, especially not only against the U.S. dollar but also against a basket of currencies, will reduce procurement costs and increase profits. However, it will have a greater adverse impact on export companies, which have been affected by the epidemic. The impact of the impact, the slowdown in external demand, and the appreciation of the RMB will lead to an increase in the cost of export products, which in turn will affect the international market competitiveness of export enterprises’ products. At the same time, there will also be exchange rate risks, which may lead to exchange losses. Therefore, export enterprises must take measures to prevent and Avoid exchange rate risks. At present, many companies have taken measures to reduce exchange losses. The listed company Hongbai New Materials recently issued an announcement stating that foreign sales account for a large proportion of the company’s operating income and plans to carry out forward foreign exchange settlement and sales of no more than 50 million US dollars. business to reduce the impact of future fluctuations in the exchange rate between the US dollar and the euro against the RMB on the company’s operating performance.
The strengthening of the RMB exchange rate may continue, but considering the possible risks in the future, including global risk aversion, Sino-US relations and Due to asymmetric capital controls, the RMB exchange rate may show an appreciation trend with a slowing slope, and the short-term RMB exchange rate range may be 6.7~6.8. The continued appreciation of the exchange rate may have a certain impact on China’s exports and manufacturing industry. Experts point out that the RMB exchange rate is a reflection of China’s economic fundamentals. In the short term, because China’s economy continues to rebound, international investors are optimistic about the capital market, and foreign capital continues to inflow, these factors are expected to further promote the appreciation of the RMB. Exchange rate stability contributes to economic and financial stability, and the two complement each other. We must steadily and orderly expand the opening of the financial market, improve the RMB exchange rate formation mechanism, and promote the internationalization of the RMB. In the long run, the RMB exchange rate will remain at a balanced and reasonable level.
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