On Wednesday night, the Federal Reserve announced that it would raise the target range of the federal funds rate by 25 basis points to 0.50-0.75%. The interest rate increase was fully expected by financial markets. However, Federal Reserve Chairman Janet Yellen said that this interest rate increase is only a “very small adjustment on the Fed’s interest rate path.” The market interpreted this as: the Federal Reserve hinted that it will raise interest rates more quickly in 2017, and may raise interest rates three times in 2017. . Greatly boosted by the increase in the number of expected interest rate hikes in 2017, the U.S. dollar instantly surged to a 14-year high, while emerging market currencies fell sharply and fell to new lows. Because the U.S. dollar is the main settlement currency for international business, raw material prices also Financial assets are also priced in U.S. dollars, so the impact of the Fed’s interest rate hikes on capital flows in the entire international market, foreign trade, and stock and bond markets cannot be underestimated. So what impact will the Fed’s interest rate hike have on my country’s textile industry?
First of all, the cost of importing high-grade and high-grade cotton such as US cotton and Australian cotton has increased. U.S. stocks and the U.S. dollar index have been driven up sharply by the Federal Reserve’s interest rate hikes (and hints that it may raise interest rates three times in 2017, with an unusually “hawkish” attitude). Emerging countries, including the RMB, are under severe pressure to depreciate their currencies. Import costs are rising, which is not conducive to cotton. , corn and other bulk commodities are imported. Taking into account the political environment in which Trump was elected to change monetary policy, and the increase in deficit led the Federal Reserve to sharply raise interest rates, textile companies and import companies with cotton import quotas within the 1% tariff are likely to increase contracted imports of foreign cotton in recent months. We will work hard to lock in the cost of imported raw materials as soon as possible. Of course, compared to US cotton, Australian cotton, etc., the purchase of Indian cotton, Uzbekistan cotton, etc. is not greatly affected by the sharp rise in the US dollar index (the currencies of various countries have depreciated against the US dollar).
Secondly, the impact of importing yarn and gray fabrics from India, Pakistan, Vietnam and other origins is not obvious. Judging from the survey, since 2015, our country’s weaving factories and traders have generally placed orders directly to yarn mills when purchasing Southeast Asian cotton yarn, basically bypassing foreign trading companies or exporters, and mainly signed contracts for “futures yarn” (imported yarn). More than 70% of Vietnamese yarn is produced by Chinese companies that invest and build factories in Vietnam and are sold back to the country). Buyers and sellers “negotiate” directly to avoid the risk of U.S. dollar exchange rate fluctuations to a certain extent. However, due to the inconsistent depreciation of the currencies of the two parties or the possibility of inconsistent adjustment directions, Therefore, for Chinese purchasing companies in 2017, it is more conducive to the import of yarn and gray fabrics to shorten the order period as much as possible, ship and deliver in advance, or negotiate with foreign yarn mills to lock in the exchange rate.
Once again, the Fed’s interest rate hike does not mean that China’s textile and apparel exports will have an opportunity to “explode”. Although the U.S. dollar index continues to rise, the continued depreciation of the RMB is inevitable (some experts suggest that the RMB should depreciate fully before Trump takes office on January 20), which is conducive to China’s export earnings and a rapid rebound in textile and clothing exports, but there are things that need to be noted. Recently, countries such as Europe, the United States and Japan have “teared up” the WTO agreement, refused to recognize the status of a “market economy country”, and still used “surrogate country” prices in anti-dumping. Therefore, in 2017, developed countries such as Europe and the United States set up import trade barriers layer by layer and frequently Implementing “anti-dumping” measures against Chinese products and weakening the export competitiveness and channels of Chinese products will become more “unscrupulous”; and due to the great uncertainty in the timing and intensity of the interest rate hike in 2017, Chinese textile and apparel companies, Foreign trade companies must be on alert. What impact will the Fed’s interest rate hike have on China’s textile industry?
