According to the latest data from the China Foreign Exchange Trading Center, the central parity rate of the RMB against the US dollar was reported at 6.8904 on November 23, a decrease of 125 basis points from the previous trading day. Experts say the short-term rebound in the RMB exchange rate is expected to be limited.
Industry insiders analyze that the spot exchange rate of RMB against the US dollar has fallen sharply. Listed textile and apparel companies that mainly settle in US dollars and have a large proportion of export business are expected to usher in periodic benefits.
The textile industry benefits from the depreciation of the RMB
GF Securities released a research report saying: “The depreciation of the RMB will help improve the competitiveness of enterprises’ export products, enable enterprises to get more orders, and drive the growth of exports.” GF Securities believes that to a certain extent, it will help to delay the growth of textile and clothing products. In recent years, due to the outflow of orders caused by the rising domestic labor, environmental and other production costs, the industry’s export value growth has continued to slow down, and even experienced negative growth.
Affected by the appreciation of the RMB and rising labor and raw material costs, the competitiveness of my country’s textile and apparel industry in major world markets has been continuously weakened in recent years, and textile and apparel exports have declined year-on-year.
In the first three quarters of 2016, the U.S. economy gradually recovered, but the market was still in a sluggish state. According to the latest statistics from the General Administration of Customs, my country’s textile and apparel exports in October 2016 were US$21.46 billion, a month-on-month decrease of 5.73% and a year-on-year decrease of 9.28%. Among them, the export value of textiles (including textile yarns, fabrics and products) was US$8.598 billion, a year-on-year decrease of 6.64%; the export value of clothing (including clothing and clothing accessories) was US$12.862 billion, a year-on-year decrease of 10.96%. From January to October 2016, my country’s cumulative export volume of textiles and clothing was US$222.561 billion, a year-on-year decrease of 5.31%, of which the cumulative export volume of textiles was US$88.132 billion, a year-on-year decrease of 3.25%; the cumulative export volume of clothing was US$134.429 billion, a year-on-year decrease of 6.62%.
Although it is difficult for demand in overseas developed markets, especially European markets, to improve in the short term, industry insiders believe that for every 1% depreciation of the RMB exchange rate against the US dollar, the sales profit margin of the textile and apparel industry will increase by 2% to 6%. Moreover, my country’s textile and apparel industry ranks first in the world in terms of scale, and exchange rate changes have a huge impact on the industry.
Some people in the industry pointed out that the textile and garment industry is highly dependent on exports. On the one hand, the depreciation of the RMB will help companies reduce costs and improve product competitiveness. Enterprises will get more orders. On the other hand, it will help export-oriented enterprises. Enterprises receive exchange gains. The depreciation of the RMB means that the purchasing power of foreign currencies has increased, which will further stimulate consumption and be beneficial to the export of textile products.
A person from a listed company in the textile industry that focuses on exports told reporters that during the period of RMB depreciation, it is indeed good for the textile industry, but this is only a short-term impact, and we need to wait and see in the long term.
“Since the company is facing a niche market, it only accepts bulk orders, usually once every six months. Therefore, the depreciation of the RMB will benefit the company in the short term, but whether it will be beneficial in the long term depends on the later trend.” The above People from listed companies in the textile industry told reporters that if the RMB depreciates for a long time, it will naturally be a long-term benefit, but if it is only short-term, the impact on the company’s performance will not be obvious.
Some analysts pointed out that since orders from overseas customers are placed in advance and the letters of credit issued by customers are usually settled within 30 days or 90 days, short-term exchange rate fluctuations will not have a significant change in the increase in the income of export companies. , the key is to pay attention to the next exchange rate changes. If the exchange rate changes continue, orders and quotations will be affected. Export enterprises should proceed from the standpoint of exchange rate preservation and choose to do forward foreign exchange settlement and sales or RMB options and other businesses in banks. To avoid potential risks caused by exchange rate fluctuations.
Other analysts suggest that companies that import raw materials from Europe and the United States can postpone their purchases from foreign suppliers and check the exchange rate before making a move; or they can ask for deferred payment. If they can discuss with the exporter, they can allow the delivery date to be postponed. It is tantamount to delayed payment.
Watch the future reaction of the international market
It is generally believed in the industry that the depreciation of the RMB will benefit export business, especially leading textile and clothing companies with a high proportion of business settled in US dollars. On the one hand, it will help the company increase orders. On the other hand, most companies will settle in US dollars, and the depreciation of the RMB will You can also get certain exchange gains.
However, some people from listed companies said that although downward changes in the exchange rate are clearly beneficial to the industry, most companies have previously adopted a series of means to hedge exchange rate risks, such as import hedging, US dollar financing and forward foreign exchange transactions, which have a negative impact on corporate performance. The degree of positive impact needs to be analyzed on a case-by-case basis.
Another person from a listed textile and apparel company that focuses on exports told reporters that although the depreciation of the RMB is good for textile and apparel export companies, since the RMB is related to the international market, it is necessary to see the reaction of the international market in the future.
There are currently two opinions in the market regarding the future trend of the RMB. One is that in the long run, the RMB will not continue to depreciate; the other is that the RMB will continue to depreciate.
Statistical data shows that from November 4 to 21, the central parity rate of the RMB against the US dollar suffered 12 consecutive falls, with a cumulative depreciation of 1,494 basis points, and a depreciation rate of 2.21%. Although there was a brief rebound on November 22, on November 23 But it fell again. Some experts believe that in the short term, people willThere is still depreciation pressure on the US dollar, but in the long run, China’s economic fundamentals do not support the long-term depreciation of the RMB, and the country’s large foreign exchange reserves will also provide support for the long-term strength of the RMB.
Yu Yongding, a member of the Chinese Academy of Social Sciences, said recently that it is difficult for a country like China to depreciate its exchange rate significantly.
However, Allanvon Mehren, chief analyst at Danske Bank, said that the yuan is expected to gradually depreciate; as China’s economic growth is under pressure and debt risks are rising, the Federal Reserve is restarting interest rate increases, and foreign direct investment (FDI) is no longer net inflows. Put pressure on the yuan. The depreciation of the RMB is approaching the “7” mark, and textile companies admit that it is indeed beneficial in the short term
