The yuan's exchange rate has soared, becoming a haven for global capital

 Unconsciously, the RMB exchange rate has risen from 7.18 to 6.74, up a lot. On the one hand, the rise of the RMB exchange rate shows that the United States has unlimited printing of banknotes and the value of the United States dollar has been reduced, on the other hand, China has taken the lead in controlling the epidemic situation, restoring economic growth and becoming a safe haven for global funds. But attention should also be paid to the impact on exports of rising renminbi exchange rates, and hot money inflows will increase the risk of volatility in domestic capital markets. From the bottom of March, the yuan rose from 7.18 to 6.74, up 4400 basis points, and rose 3.71 percent in the third quarter, the best quarterly performance in 12 years, after the 2008 financial crisis.

The RMB exchange rate rose sharply, corresponding to the decline of the dollar index. Since the outbreak, the Fed has been printing money to save the market, making the dollar liquidity flood, the dollar value naturally reduced, the rise in the renminbi is understandable. Since the outbreak of the new crown, the United States Congress has passed four stimulus packages, allocating nearly $3 trillion. On Oct.1, the U.S. House of Representatives voted to pass a new $2.2 trillion stimulus package. Imagine that ordinary American who don't have to work in the epidemic receive higher wages than Chinese white-collar workers, and someone must pay for the money. At the same time, China's first control of the epidemic, economic growth, but also make our country a safe haven for global funds, now the only investment in China is safe, only Chinese factories are fully resumed production. At present, the second wave of the epidemic situation in Europe and the United States has arrived, but our country dare to let go of control, the introduction of 8 days of National Day Mid-Autumn Festival holiday to stimulate the economy, Western countries can only envy and hate. To control the epidemic situation is, on the one hand, vaccine research and development, China's vaccine has entered the third phase of clinical trials, in the existing large number of clinical data, no one has side effects, the effect is very obvious.

But we should also guard against the negative impact of the rise in the RMB exchange rate on the economy. The rise in the RMB exchange rate will inevitably reduce the relative competitiveness of Chinese export enterprises, plastic injection molding business already face such a problem now. Japan was forced by the United States to raise the yen exchange rate, which greatly hit the export competitiveness of Japanese goods. In the end, Japan's economy fell into recession for 20 years. Even now, the GDP of 2019 in Japan has not exceeded the level of 1995.

Of course, the sharp appreciation of the RMB exchange rate, exports will certainly be hit. As Cnmoulding, now injection molds order is lower than before. However, since the outbreak, China's export situation has been improving and even positive growth has occurred in August, mainly because of the unparalleled superiority of our domestic perfect supply chain system under the great destruction of the global supply chain. Manufacturing in many countries has been hit hard by the epidemic. The impact of the RMB exchange rate on China's exports must at least wait until the epidemic is controlled. On the other hand, the inflow of hot money into the country will also aggravate the turbulence in the domestic capital market. The characteristic of hot money is that it comes and goes quickly, and if the Fed's policy changes, the enthusiasm will flow out quickly. The domestic stock market will fall into violent shock in a short time, this is also bad. Similarly, at the beginning of this year, the stock market in the United States fell into a continuous fuse, also because of the huge impact of the epidemic on the economies of various countries, countries have withdrawn funds from the United States market, the result of the withdrawal of hot money. A rise in the RMB exchange rate means that the value of the RMB is recognized by the international market, and the exchange rate rises by 5%, which means that the GDP has increased by 5%, and the overall national strength of our country is bound to rise. But we should also pay close attention to export competitiveness and the flow of hot money, control the rhythm.

If the RMB becomes an international currency, what will happen?

 In recent times, the RMB exchange rate seems to be a bit "fierce ", as of September 1, the onshore RMB against the dollar temporarily reported 6.81, this is what concept, for a long time the exchange rate is above 7.0, a short period of three or four months from 7.19 to 6.81. In other words, this may not be felt, if converted, the gap will come out. If you hold $100000 at the high of the dollar, you may lose about 40,000 yuan by now!

It is precise because the yuan is "singing" that many people have put forward conjectures, such as some saying that the yuan may become an international currency and others that the yuan's status may surpass that of the dollar. Of course, this is just a conjecture, not yet a fact. However, there is a question worth thinking about. If the RMB is really "internationalized ", what changes will it bring to our lives? I think there are the following points.

 First of all, when Chinese residents travel abroad or work, they do not need to exchange the RMB into other currencies, and they also save the trouble of calculating the exchange rate. That is to say, it is more convenient for our residents to leave Congress. Secondly, if the RMB becomes international currency, then foreign trade transactions will also use RMB, and the RMB will circulate all over the world. Just like the current dollar, more foreign-funded enterprises will cooperate with us because of the status of the currency. There will also be foreign-funded enterprises in China to increase employment in China.

In addition, once the RMB becomes the mainstream currency, the reference standard of the exchange rate will also change, which used to be the reference dollar, so when the RMB becomes the international currency, the RMB will become the reference standard. To put it simply, China's foreign trade will not be affected by the exchange rate as it is now. We can't guarantee that all kinds of import and export costs will be reduced, but we can be sure that they will be more stable than before, which is what we want to see.

 For those who do business, they would rather make less money than make business stable, so this is of great help to our foreign trade industry , For example, cnmoulding is a professional export plastic moulding company, which is also big monetary welfare. Finally, the problem of inflation, in fact, although the United States is overissued currency, but the dollar index has not declined, which means that the United States has no major inflation problem if the renminbi becomes the mainstream currency, In fact, like the current dollar, it will not depreciate because of something.

This should be the most desired thing for the common people of our country, after all, prices have been rising, and inflation has a great relationship. If this environment can be stabilized, it is really great good news. So is there any harm in turning the yuan into an international currency

How can foreign trade enterprises save themselves after the sharp appreciation of the RMB?

"I don't want to settle my foreign exchange! But fear of further appreciation ."

 Faced with a sharp appreciation of the yuan, hit a new high in more than a year, CNMOULDING precision mold companies quite contradictory.

 Since the usual orders are settled 90 days after shipment, and the exchange rate between the dollar and the renminbi at the time of the order is still about 7.1, it now fluctuates to about 6.8, with a direct loss of 4%," net profit was suddenly appreciated to rise ".

 Under the impact of anti-globalization and global epidemic, the already complex foreign trade situation is becoming more and more severe. The recent sudden appreciation of the RMB has made its foreign trade business worse.

 Although exchange rate fluctuations are a familiar risk for foreign trade companies, under heavy pressure, falling straw also becomes heavy.

 Loss of net profit and difficulty in raising prices

For foreign trade products such as plastic injection molding products, the appreciation of the RMB by 4% is a direct net profit from most orders.

 Foreign trade orders for plastic products are in June ~ August, while foreign exchange settlement peak is after September. This also means that when large-scale orders were placed, the yuan was about 7.1 against the dollar, and by the time the foreign exchange settlement was directly more than 6.8, the magnitude of the loss could be imagined for commodities such as plastic products.

 In order to cushion the exchange rate risk, the company will usually take some export products to lock foreign exchange measures," this sudden appreciation of the renminbi is somewhat unexpected, appreciation speed is also relatively fast, many have not had time to lock foreign exchange ."

 Lock foreign exchange refers to forwarding settlement and sale of foreign exchange business, that is, determine the exchange price before, the actual foreign exchange income and expenditure occurred after. In order to reduce the impact of exchange rate fluctuations, some foreign trade companies will adopt the method of locking the exchange rate in advance to reduce the risk of two-way fluctuations.

 However, the lock itself also has the risk, in the future exchange rate trend is relatively clear and stable, the company can lock the exchange rate in advance to reduce the loss caused by the exchange rate rise or fall. But if the judgment is not accurate, the lock will affect the profit instead.

 A few years ago, the trend of the renminbi suddenly changed from appreciation to a sharp depreciation, we were caught unprepared, but also let them hold an emergency meeting, immediately stopped the lock-in operation.

Search in danger

 Compared with the export of traditional industries such as clothing and textile, the export of products such as bicycles and laptops in the epidemic situation has risen against the trend and even ushered in a blowout, which has given them some initiative.

 Yiwu Longda vehicle business operator Wu Yaping told the first financial reporter, this year is the best year in 20 years of business, and the past New year and Christmas before and after the peak season, this year since May has been the export season. The market in short supply allows them to choose ways to facilitate their transactions, such as all orders are settled in renminbi.

 "Because of the uncertainty of the overseas epidemic, we are worried about the impact on the settlement of foreign exchange, so we all set up a settlement in RMB, and don't worry about exchange rate fluctuations ." Wu Yaping told reporters that some customers want to do a letter of credit, was also rejected. According to her estimate, exports this year are at least three times those of last year.

 As an early exporter of electric bicycles, Suzhou Mengshi Intelligent Vehicle Technology Co., Ltd. increased its exports by 2.5 times in the second quarter. For them, the fastest-growing overseas market in the United States, followed by the European region.

 Although the industry is growing against the trend, factors such as the epidemic and the US election still have a greater impact on the company's overseas services, and the future situation is difficult to judge, Zeng said. In order to cushion the impact of trade friction, they have laid out overseas assembly plants and plan to base themselves on online sales to lock in more young people.

 On the impact of RMB appreciation, in the foreign trade industry for more than 20 years Meng Zhuo also looked far away.

 Meng believes that keeping the renminbi high makes foreign exports more difficult, but it will also have other effects, such as expanding the renminbi's share of the world currency, preventing Chinese capital outflows, and increasing imports to reduce surpluses with countries such as the United States. These benefits may well outweigh the temporary loss of exports.

 The so-called crisis has always been in danger. The rise in the RMB exchange rate is not conducive to exports but to imports. Under the background of the domestic and international double cycle, improving the added value of products, trying to increase for enterprises to improve the added value of products, try to increase imports and open up domestic markets.

Will the RMB yuan exchange rate against the dollar "break 8"? !

The RMB exchange rate in the recent period encountered a substantial depreciation, once set a 10-year low! 

But these two days, the RMB depreciation momentum also has no sign of releasing aid, easily broke through 1:7.1. On May 28th it hit 7.1964 at one point, followed by a slowdown in the renminbi and a rebound. As of the close, the yuan was 1:7.1364 against the dollar. Experts say the yuan is likely to continue to fall against the dollar in the short term and investors should be cautious about bottoming out.
 Now, everyone is looking for the reason why the yuan has plummeted? The main reasons for our analysis are as follows: first, the moderate depreciation of the RMB exchange rate is beneficial to Chinese export enterprises. Affected by the new crown epidemic, the European and American market demand plummeted, a large number of orders were canceled. At the same time, developing countries such as Russia, India, Brazil, and Argentina have also experienced outbreaks, and economic growth has also been affected by the epidemic. In order to enhance the competitiveness of China's exports in this special period and ease the export pressure of export commodities, it is necessary for China to keep the RMB exchange rate in a relatively low position.

 Moreover, domestic monetary policy is generally loose. After the outbreak, the domestic economy was restarted and investment plans for infrastructure projects were launched. This year has been several domestic cut, interest rate cuts, and our central bank has said that the follow-up cut, there is room for interest rates. It is clear that domestic monetary policy will continue to be looser in order for the economy to recover in the second half of the year, and in each case, the depreciation of the renminbi is expected

•  Finally, the outbreak of the new crown has brought uncertainty to the global economy, the European and American economies are depressed, and China's economic recovery is still some time. As a result, a large number of hot money are holding dollars to avoid risk, which led to the recent global "dollar shortage ", and the continued strength of the dollar index, always hovering between 98-100 high, which also led to a sharp fall in non-US currencies, and the dollar and the yuan exchange rate showed a negative correlation, so the yuan exchange rate has a trend decline.
•  Are many now worried that the yuan will fall below 8% against the dollar? I think this worry is superfluous. First, the current RMB has accelerated the pace of internationalization. On the one hand, Chinese A stocks are officially listed in international indexes such as MSCI, and some overseas hedge funds will flow into China through QFII、RQFII and other channels for asset allocation. On the other hand, China has launched the Shanghai crude oil and gold futures market, which is priced and settled in RMB. This will greatly promote the internationalization of the yuan, driving up the demand for the yuan for overseas investors, thereby promoting the appreciation of the yuan.
•  Second, the U.S. is also reluctant to see the U.S. dollar index continue to be strong, the yuan continued to decline. Because a rapid depreciation of the yuan's exchange rate would improve the competitiveness of Chinese goods. In the current global recession, the United States still wants the dollar index to depreciate and the yuan to appreciate, thus increasing the competitiveness of American goods exports. If the yuan continues to fall, it is believed that the United States will control the dollar's appreciation process. So, the RMB exchange rate against the dollar depreciation space will not be too much, let alone go to "break 8". 
•     Third, only if the RMB exchange rate remains relatively stable can it benefit China's economic development. Moreover, China's RMB exchange rate is not completely market-oriented, China in addition to more than 300 million foreign reserves, there are many instruments to regulate exchange rate fluctuations. such as reverse repurchase factors, issuing central tickets in offshore markets, tightening loose monetary policy, and so on. As long as the state is willing to do so, it can contain the trend of the RMB exchange rate falling continuously. So, we think there may still be a fall in the yuan, but the probability of "breaking 8" is basically zero.
•  After entering May, the renminbi has fallen all the way, especially in recent days, when it has fallen to record lows. The main reason is that the dollar has become a safe-haven currency, the dollar index is hovering high, plus China's monetary policy continued easing, which has increased the rate of depreciation of the renminbi. Although the renminbi has fallen sharply, it is impossible to "break 8 ;. Now all parties hope that the yuan exchange rate will be stable, which is conducive to the internationalization of the yuan, conducive to the recovery of China's economy, and the Central Bank of China is fully capable of stabilizing the yuan exchange rate and stabilizing the exchange rate in a large box.

• As an injection mold company foreign trade company, the depreciation of RMB is good for us, if the economy is not good, I believe the RMB break 8 will appear

Why is the China RMB suddenly falling sharply

What happened? The rapid devaluation of the RMB

Yesterday, the exchange rate market appeared obvious fluctuations, offshore yuan trading time fell below 7.15,7.16,7.17 points, the evening decline further expanded,7.18 and 7.19 were also broken, the highest depreciation within the day of 500 basis points. 7.19 This position, basically the lowest in recent years, before the appreciation of the yuan from 8 to 6, and then from 6 now devalued to 7.19, the yuan has been a roller coaster ride in the past decade.

 So why is the rapid depreciation of the RMB?

First of all, we do not set growth targets this year, which has an impact on confidence in international capital, and it is normal for the economy to depreciate its bad exchange rate.

 Second, the growing voice of external disharmony, which makes imports and exports also increased obvious uncertainty, the continued surplus is conducive to currency stability, if the basis of the surplus does not exist, then the value of the currency will also fluctuate.

 Third, the issuance of special treasury bonds, government debt will certainly rise sharply this year, coupled with the central bank's continued easing, and the possibility of a cut in interest rates in the future will reduce the value of the local currency.

 Fourth, strong U.S. stock markets, a restart of the economy, and persistent deflationary pressures have not eased, leaving capital still in demand for safe havens, so the reverse flow of global capital is not conducive to the stability of the renminbi.

 Fifth, we may also subjectively intend to let him depreciate, depreciation will be more conducive to exports. which is beneficial for us to digest domestic stock. Stable economy.

 So, all countries are playing games now, and the exchange rate is an important game, but Lao Qi believes that the RMB is a little undervalued now, because although we are loose, but the speed of printing money, obviously still can not compare with the United States, so there may be a lot of uncertainty in the short term, but in the medium and long term, at least the RMB against the dollar is undervalued. Nor can we let the yuan depreciate forever. Because a continued devaluation would do so much harm.

 First, the continued depreciation of the renminbi will accelerate the withdrawal of foreign capital and drain foreign exchange reserves. Foreign exchange is the central bank's assets, foreign exchange decline, the central bank's balance sheet is bound to shrink. will also affect domestic monetary policy.

 Secondly, depreciation is not conducive to asset prices, we have said before, the rapid depreciation of the RMB process must be the stock market down, indicating that funds are going out, market funds are reduced, will certainly fall. The same is true of the bond market, capital decline must be interest rates rise, prices fall, so the market bond market pain is inevitable. Moreover, higher interest rates are not conducive to economic recovery. The outflow will also put pressure on the housing market.

Third, the depreciation is too large, the status of RMB internationalization will have a huge impact, you are now a reserve currency, can not easily fluctuate so much. Otherwise, people lose faith in you, they don't need you.

 Fourth, although it is good for exports, it is not good for imports, and depreciation means that we will purchase raw materials more expensive. And many of our manufacturing are processing materials, the beginning to go to inventory when very cool, but wait until to fill the inventory, found carrying side sink.

 Fifth, the depreciation of the RMB is also greatly unfavorable to the wealth of the people and studying abroad, traveling, and purchasing overseas will all be affected.

 Exchange rate issue is very sensitive to each of our foreign trade plastic injection companies, share to you, hope to help you.

RMB and US dollar showdown

2015. 12.3 night, a trillion dollar profit levels of the Holocaust occurred.

The people expected of the Holocaust

  The European Central Bank cut interest rates evening, as well as many economic scholars including Chinese big reversal for the dollar, the devaluation of the yuan long advocated, more real space next to those of the US capital predators, sent a huge brainless opponents dish, because there You do not have to spend money to lure more.

      The dollar index, rose and then fell, from a high of 100.47, plummeted to a little over 97, down 2.2%. Created since March 2009, which is the biggest decline in almost six years. Was the outbreak of the subprime crisis, the dollar index single-day decline of 2.9%. Even worse is that this crash, after the ECB cut interest rates, we would have expected, the dollar would like to take this opportunity to create recovery highs yet again.

Why is there such a result seems inconsistent with the logic of it?

 Logic never wrong, the wrong people

  In fact, it never appears opposite logic with real financial logic, if that trend and as expected, can only be predicted logically wrong. The dollar index is down not up, the logic behind it is that I have been talking about, the dollar index is currently only rebound, but the rebound high point, the Fed announced the rate hike will really come when the dollar index is likely in 103 about the location, and build a double top.

  Therefore, if the December Fed rate hike, the dollar index likely to turn down. Now, the euro announced interest rate cuts, the effect and the Fed announced the rate hike is about the same, capital predators have seized this opportunity, when everyone thought the dollar should continue to rally, effortlessly find a big rival short wave plate, which It is a hearty, lucrative funds massacre last night incident, at least at the scale of its earnings more than one trillion US dollars.

After the weak dollar, the RMB yuan will be okay?

       Just past the renminbi incorporate SDR, it is actually happening behind an emperor to abdicate drama. US dollar share in the SDR is almost intact, 10.9 percent of China, mainly the euro, pound and yen let out. How to look like the dollar a few little brother, try to turn the yuan pull into same, of course, one of the most active is the euro and the pound.

        RMB added SDR, slow decline accelerated dollar hegemony, the United States is no way this point, in the period of review which has been talked about, because, if the United States allowed China to get involved, then China can only start all over again, IMF may end a mere figurehead. US may eventually have to play mahjong, instead of playing their own good at the bridge. More importantly, China included is the people, the general trend, the United States did not dare to go against the trend, otherwise people are lost.

       RMB join the international influence of SDR, it is more than expected, at least beyond American expectations. Because, after nearly 10 countries represented, to incorporate the renminbi foreign exchange reserves, increased investment in RMB assets. This psychological expectations very terrible, because it will greatly affect the current US strong dollar strategy.

    Strong dollar strategy, whose aim is to create the illusion of the American economy thriving in the world, the temptation for more capital to the United States then set high assets, thereby to complete the field in a large universe diversion of global capital, while the US capital at the universe after the big diversion, go to the whole world to acquire cheap assets. This strategy has become the United States from the subprime crisis turned completely, the only possible solution.


        But the hope that, with inclusion of the RMB SDR increasingly slim. So also, we see the US media out disinfection, said the yuan included in SDR, it will not have any immediate impact, but does not affect the status of the dollar in the world. Former Federal Reserve Chairman Ben Bernanke, also personally photographed, said the yuan included in the SDR, simply do nothing, which is equivalent to the Chinese made a small red flower it, we should not be all wrong.

  Butterfly wings have been instigated, and then it was too late to remedy. The dollar plunged last night, not just against the dollar this should not have time to correct abnormal strong, but also the host of the RMB capital market once Zhuanghang.

Strong dollar strategy or failure in advance

 In the review of 25 November, when I have talked about, Chinese Manniu opening, the biggest problem is the Fed's strategy of a strong dollar, because it greatly hampered the US-led strategic capital outflow China. "The Fed wanted to wait for the Chinese economy signals a further deterioration, especially after the stock market crash, China was a substantial outflow of capital, the rapid devaluation of the renminbi is expected to enlarge, once concerns about China's economic influence throughout the world, the US media in the calculation outside China Chu also top a few months, but fortunately, China stabilized now, China Manniu reopened, which gave the best weapon against the strong dollar China strategy. "

  Of course, my view is not mainstream, most Chinese scholars, are still forecast in the next few years the dollar bull market, and that the yuan to a large devaluation of house prices to drop. Some Americans even more than they are optimistic about the US economy.

In fact, when the global so generally optimistic about the time an asset, which in itself is a huge risk. Especially promising is the Fed deliberately misled come a time when the common good, hides a huge massacre future assets. China's rich past few years has been for the US real estate market, sent at least $ 350 billion in cash support, has almost the same, it may be necessary to go bargain-hunting quilt.

  Dollar plunged last night, did not see the Chinese media have too much coverage. Occasionally there are a few, but also "the dollar's slide," with the word. 2.2 percent, the biggest decline in six years, with the decline seen to have lost the basic objective.

 However, no one can stop the tide of history, the Fed and the White House, the fantasy of this to finance big showdown to complete the subprime crisis completely turned around, complete re-parasitic ambition dollar hegemony, and probably will soon become Bubbles.

   The above article not my orininal, Cnmoulding is a China mold maker , hope brought to share, as a plastic injection molding manufacturer in Shanghai, I still firmly believe that a big currency issue, at least if I choose to I want to hold dollars instead of the continuous depreciation of the yuan.