On the first trading day of the new year, the RMB exchange market made a strong appearance. After the onshore RMB opened more than 200 points higher against the US dollar, it continued to rise and stood strongly above the 6.50 mark, reaching a maximum of 6.4733, rising more than 600 points during the day. Large exchange rate fluctuations in the short term will have a great impact on textile and apparel companies that already have relatively thin profits.
Although the return of orders and the rebound in overseas demand have led to the growth of export orders, it has not brought sweet results. Some textile companies The person in charge said, “Everyone is very busy, but in the end they don’t make any money.” This seems to have become a common phenomenon among textile companies, and the factor that “eats up” corporate profits comes more from the appreciation of the RMB.
As of 10:30 a.m. today, the US dollar against the offshore RMB broke through the 6.4900 yuan mark, with the latest price at 6.4901 yuan; the US dollar against the onshore RMB last reported at 6.4919 yuan, which is about to rise above 6.5 mark.
From January to May 2020, affected by the impact of the epidemic, the RMB exchange rate fluctuated and depreciated, and once depreciated to around 7.17 in May. But with the end of May, China’s epidemic was fully controlled, the economy fully recovered, and the RMB resumed its upward trend!
Since May 28, 2020, the RMB has increased by 9.34%, with a rebound of more than 7,000 points.
It is understood that the export volume of a certain clothing foreign trade company during the peak season (July to October) last year was approximately US$150 million, and the settlement time is generally one month behind the shipment time. Month or 45 days, based on the calculation of exchange gain and loss of 0.2 per US dollar, the loss will reach 30 million yuan. The person in charge of a home textile company also lamented, “The thin profits in the second half of 2020 are mainly due to the exchange rate. The rising exchange rate directly ‘ate up’ seven or eight points of our profits. In the second half of the year, we lost about 50 million yuan due to the rising exchange rate.” He said, “The currencies of our competitors are all depreciating. For example, Turkey is a competitor of high-end products. In the past three years, its exchange rate against the US dollar has depreciated from more than 3 points to 7.8.”
Regarding the trend of the RMB exchange rate in 2021, Qu Hongbin, chief economist of HSBC Greater China, believes that there is pressure for the RMB to appreciate this year, but the extent of appreciation is within a controllable range. He predicted that the RMB exchange rate against the US dollar would float between 6.4-6.6. This small value-added range is still affordable for the export industry and manufacturing industry.
Guan Tao, global chief economist of BOC Securities, believes that the trend of the RMB exchange rate in 2021 may not be as strong as imagined. We need to pay attention to the dullness of the market’s positive reaction next year and pay attention to the possible emergence of New bad news. If vaccines are launched and vaccinated, developed countries may be the first to achieve herd immunity, which will eliminate China’s leading advantage in epidemic prevention and control and economic recovery. Although the recovery of global demand will help my country’s export growth pick up, Europe and the United States will have a low base advantage next year. If my country’s export share falls, it may become a reason for the market to be bearish on the RMB again.
Zhu Haibin, chief economist of JPMorgan Chase China, believes that this round of RMB appreciation is driven by China’s economic fundamentals. It is expected that the RMB will still maintain a strong trend in 2021, at least this year. The round of RMB appreciation period will last until the first half of this year. By the end of 2021, the exchange rate of RMB against the US dollar will rise to about 6.25 yuan. </p
