RMB exchange rate issue

This year's exchange rate trend is still worthy of attention. In May, driven by the expectation of the Federal Reserve to raise interest rates, the US dollar index continued to rise, leading to a significant depreciation of the RMB against the dollar, which had a certain impact on the market mentality. Recently, the depreciation of RMB has eased moderately, but from the follow-up expectation, the depreciation may not be over yet, still need to make psychological preparation.

The impact of the devaluation of the RMB is two-way:

For the varieties with large proportion of raw material import, the rapid depreciation of RMB led to a sharp rise in cost, and the pressure of enterprises increased accordingly. For example, the import of pulp, raw material of viscose, and PX, upstream product  of polyester fiber,  have seen surging cost due to the depreciation of RMB.

For export-oriented products, RMB depreciation will bring a certain price advantage, but it is worth noting that RMB is only depreciated against the US dollar, while compared with Southeast Asian countries, the competitive advantage is not obvious. In addition, great fluctuation of short-term exchange rate will also render enterprise to show watch-and-see stance in placing orders to a certain extent.