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. As we all know, the appreciation of the RMB has a great impact on the textile printing and dyeing industry. Large exchange rate fluctuations in the short term will have a certain impact on related companies that already have relatively thin profits!
The offshore RMB rose sharply against the US dollar, reaching a maximum of 6.4539, rising more than 400 points during the day.
As of 11:45, the onshore and offshore RMB were trading at 6.4749 and 6.4537 against the US dollar respectively, both reaching their highest levels since June 2018.
Review of 2020
The RMB exchange rate showed a trend of first depreciating and then rising
From January to May, affected by the impact of the epidemic, the RMB exchange rate fluctuated and depreciated, and once devalued 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. A simple calculation shows that if a resident exchanges 100,000 US dollars, it will cost 719,000 yuan. Today, the minimum is only 648,000 yuan, a difference of nearly 70,000 yuan. In other words, if someone exchanged 100,000 U.S. dollars six months ago and holds it till now, and then exchanged it back for RMB, he would have lost nearly 70,000 RMB. Foreign trade people are already crying in the toilet. The balance of many US dollars has depreciated so much before they were converted into RMB…
How will the RMB move in 2021?
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, and it is expected that the RMB will still remain relatively high in 2021. The strong trend indicates that at least this round of RMB appreciation 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.
CITIC Securities predicts that the U.S. dollar index will fall below 85 in the third quarter of 2021, the RMB will rise to 6.2 against the U.S. dollar, the U.S. dollar will enter a medium- to long-term depreciation stage, and foreign capital will trend towards increasing allocations to China assets.
It is tragic that a foreign trade company lost nearly 30 million!
1. With the depreciation of the US dollar and the appreciation of the RMB, no new foreign trade orders have been received in a week.
2. The entire industry also generally feels the impact of the rapid rise in the RMB exchange rate.
3. Mainly reflected in the price increase, fewer orders, and less profits.
4. When an enterprise suffers from RMB exchange rate losses, coupled with the pressure of rising raw materials and rising shipping freight, the operating pressure of the enterprise will greatly increase.
A garment foreign trade company: The company’s export volume during this peak season (July to October) is 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. </p