The super commodity cycle is so eye-catching that the fluctuations in the foreign exchange market have been ignored – the weakening of the US dollar has indirectly stimulated the rise of commodities, and the RMB has also silently risen like crazy.
As of 16:30 on May 10, Beijing time, the onshore RMB closed at 6.4173 against the US dollar, an increase of 416 basis points from the previous trading day, a new high since June 2018. . The central parity rate of RMB against the U.S. dollar was reported at 6.4425 that day, an increase of 253 basis points, hitting a new high since February 10. Beginning in late February, the U.S. dollar once strengthened due to the rapid advancement of the U.S. vaccination program, and USD/CNY once reached a stage high of 6.57. However, as the global vaccine popularization plan progressed and U.S. bond yields fell, the U.S. dollar began to regain strength in April. Decline. As of 18:16 that day, the U.S. dollar index was trading around 90.17, a new low in the past ten weeks.
Zhu Yanhua, a foreign exchange business expert at the International Business Department of the Bank of Communications Head Office, told China Business News that after excluding GDP growth, M2 (broad money) in China and the United States has a reverse trend. China is gradually withdrawing water, while the United States is “difficult to recover”. Liquidity level is an important factor affecting the exchange rate. It is expected that the RMB will still have the momentum to strengthen.
Although in the long run, the appreciation of the RMB is due to the optimism about China’s economy, which is considered a positive situation, but in the short term, it does pose greater challenges to textile foreign trade companies.
Take a textile foreign trade order of 1 million US dollars as an example. When the exchange rate is 6.57, the foreign exchange settlement can be 6.57 million yuan. When the exchange rate becomes 6.42, the foreign exchange settlement becomes 6.42 million yuan, the difference reached 150,000 yuan.
After the exchange rate fluctuates, it is also very difficult to negotiate with foreign businessmen for price adjustments.
A cloth boss who is engaged in textile foreign trade business said that foreigners are becoming more and more savvy nowadays. Now China has an overall excess of textile production capacity. Therefore, when negotiating with foreign trade Overseas buyers take the initiative. When the RMB depreciates, they will demand changes in purchase prices when the exchange rate fluctuates. But when the RMB appreciates, they will not rush to adjust prices. In the end, it is always the textile companies that are hurt. Now under the influence of the epidemic, foreign trade demand has shrunk sharply, market competition has become more intense, and companies’ bargaining power has become even lower.
As soon as the exchange rate changes, foreign customers who are always paying attention to exchange rate fluctuations will immediately send emails to lower the price, driving the price down again and again. As everyone knows, today’s quotations no longer have much profit to speak of and cannot withstand price reductions. In addition, this year’s foreign trade market is still affected by the epidemic, and the number of orders is still hard-won. Some companies even take orders at a loss, so when customers lower prices, they end up having to compromise.
Trader Wang revealed: “I received emails and chat messages from customers as soon as I got to work after May Day, all about lowering prices, and most of them asked for a reduction of US$0.1. Recently, I received emails and chat messages from customers. There happen to be some orders that are still being negotiated but no contracts have been signed. In order to take these orders, we have to bite the bullet and lower the prices.”
On the other hand, due to the second time overseas, The outbreak of the epidemic has caused terminal demand to remain sluggish, and all textile industry chains are under greater pressure than in the past.
The recent news that the epidemic in India is out of control has affected the hearts of people all over the world. However, for the sake of domestic economic development, most areas in India have not implemented strict prevention and control measures, and the movement of people has , factory production continues.
However, the worsening epidemic in India is penetrating into some countries in South Asia and Southeast Asia. These countries are also facing the impact of a new wave of epidemics. Thailand and Vietnam have also upgraded their epidemic prevention and control levels due to the resurgence of the epidemic, implemented cross-regional blockades and implemented stricter restrictions. Countries such as South Asia and Southeast Asia are important textile and apparel production areas. The worsening of their epidemic situation will inevitably lead to restrictions on textile production, which will, to a certain extent, bring orders back to the country. Some institutions predict that overseas orders will drop in May-June. will grow further. But we must also realize that the deterioration of the epidemic situation in these countries will also have a certain negative impact on our textile fabric exports. According to customs data, Thailand, Vietnam, Pakistan and other countries imported more than 140 billion yuan of various textiles from my country in 2020. Many domestic textile companies have more or less customers from these countries. Once their domestic textile and clothing production is restricted, they will inevitably reduce domestic fabric purchases. Although their orders may be returned to China, the orders are also in the form of clothing. Domestic clothing companies are usually limited to familiar suppliers. Companies that often do foreign trade in the market generally lack domestic trade customers and find it difficult to obtain the dividends of returning.
This year’s traditional peak season “gold, three, silver and four” are all of insufficient quality, and it is difficult to make a difference in the May market, which is gradually heading towards the off-season. Even if foreign trade orders return, only a small number of textile companies can truly profit from them, and most foreign trade companies may suffer greater losses.
Under such background pressure, textile companies have listed inventory clearance and capital revitalization as the first priority, and profits are secondary. Therefore, there are almost no products in the textile market now.There is a profit or even a loss. Although there is a certain profit for order goods, the overall profit situation is not good.
In such a general environment, a small fluctuation in the exchange rate may turn a foreign trade order from profit to loss. </p
