The exchange rate has soared again

It's a new high! On the 14th, the China National Security Center was authorized to announce the middle price of the *** exchange rate. The middle price of the *** against the US dollar has become 6.7250, up by 128 basis points from the previous trading day of 6.7378, and once again refreshed the exchange rate reform. The highest record since.

More than two years later, the *** exchange rate once again entered the appreciation channel. For exporters, the change in the appreciation of *** is not just a change in numbers. The more direct change comes from the shrinking profits caused by the exchange rate. In the words of export companies themselves, the orders for the European and American markets have been reduced during the first half of this year. In order to win over customers, the prices of products have been lowered. The appreciation of *** is undoubtedly equivalent to worse.

Dollar worse <br> <br> *** Speaking of appreciation, Changchun, a textile export company officials Guo said that for export enterprises, the exchange rate risk is commonplace. However, starting from the first half of this year, the situation is rather special. If it is described as “emerging”, it seems to be a bit too serious, but it is not an exaggeration.

"The company's main business is to export to Europe and the United States, settled in U.S. dollars. Orders from the first half of the year have not been too high." Ms. Guo said that many of its colleagues in Europe and the United States have reflected that orders in Europe and the United States are few. On the one hand, it is because of the decline in the spending power of the region; on the other hand, since the second half of last year, the Southeast Asian region has used labor cost advantages, the product price is relatively low, and the competition is fierce.

Given this pressure, Ms. Guo was forced to lower the price of the product in the first half of the year. Fortunately, the exchange rate between the *** and the U.S. dollar was relatively stable in the first half of the year, so the risk from the exchange rate was not highlighted. However, the good times are not long. In the second half of the year, *** re-bundled the exchange rate, and the exchange rate of *** against the US dollar began to rise.

Speaking of this, she opened the computer's website on the exchange rate of *** and said, “You see two months ago, on July 15th, the exchange rate of the US dollar against the *** is 1:6.77, which is exchanged on September 15th. The exchange rate was already 1:6.72." Afterwards, she took a calculator and calculated that the magnitude of the *** appreciation in two months had exceeded 0.7%.

Although the magnitude of appreciation is not large, it will be worse for businesses. As it is no longer able to enjoy the export tax rebate, before the product ex-factory price was lowered, it is also necessary to convert the exchange rate risk of *** appreciation. From these points of view, she said that profits have shrunk by at least 10%.

Euro settlement has not escaped the risk <br> <br> settled in US dollars, bear the risk *** appreciation, then settled in euros will be better then?

Mr. Liu, a person in charge of an auto parts company in Changchun, said that the company’s products are mainly exported to Europe and Southeast Asia. He felt that the euro was relatively stable a few years ago. Therefore, after many rounds of negotiations with European customers, he finally decided to abandon the US dollar. Settled in euros. At that time, I felt that I had taken a certain amount of reassurance. Now it is a "dream" that turns into a "nightmare."

As the person in charge of the export business, Mr. Liu is also familiar with the exchange rate. He told reporters that at the end of last year, the exchange rate of the euro against the euro had fallen below the integer mark of 1:10. On January 15 of this year, the exchange rate of the euro against the *** was 1:9.88. After an interval of 8 months, the exchange rate on September 15 was 1:8.09, and the appreciation level was as high as 18%.

According to statistics by Mr. Liu, the appreciation of the *** against the euro is as high as 18%. This shows that from the point of view of the exchange rate alone, without considering other factors, the shrinkage of profits will exceed 20%. Since it has been negotiated with European customers before, it is not possible to easily change the settlement currency. There is no other way than to stick to the appreciation of *** against Europe.

Product price increase is limited

As for the risk of *** appreciation, Ms. Guo and Mr. Liu both stated that the exchange rate risk has basically been equated with force majeure, so it is not a good solution.

Both said that they had considered raising the price of their products to ease the pressure on *** appreciation. Mr. Liu also personally tried, but the final result was the customer refused to speak, and even proposed to replace the supplier. So at the end, Mr. Liu’s plan to raise prices was aborted. Ms. Guo said that the competition for the products from Southeast Asia was fierce, and there was not much room for price increase, and customers could not buy it at all.

Ms. Guo said that she currently only hopes to develop and launch new products as soon as possible, and hopes to develop new customers and expand sales channels through this year's Canton Fair.

However, Ms. Guo is most worried about the exchange rate continues to rise in the next few months. "It has not happened yet. It is terrible that it hasn't happened yet." Judging from the current situation, *** will continue to appreciate against the U.S. dollar, so the profits of the product can only continue to shrink, I'm afraid the solution to this problem is still there. Not fully effective, the appreciation there has eroded all the efforts.