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Hot comments|Foreign trade companies must respond to exchange rate changes

Release time: 2020-11-04

Number of visits: 78

Hot comments|Foreign trade companies must respond to exchange rate changes

  According to information released by the State Administration of Foreign Exchange, in the first half of this year, the central parity of the RMB against the U.S. dollar experienced a trend of first appreciation, then depreciation and then appreciation. Among them, it appreciated to the highest point in the first half of the year on January 21 and depreciated to the first half of the year on May 29. Low point, and then out of a slight upward trend. Overall, the central parity of the RMB against the US dollar has depreciated by 1.48% from 2019 to June 30 this year. From the perspective of exchange rate flexibility, in the first half of this year, the fluctuation range of the RMB exchange rate between its peak and historical low was 4.4%, and the fluctuation range of the RMB exchange rate was relatively stable. Recently, the two-way volatility of the RMB exchange rate has become more apparent.

  Currency exchange rate changes have economic and political characteristics, which reflect the status quo of economic development at home and abroad, and can also become one of the indicators for the adjustment of international economic relations. Changes in the RMB exchange rate in the first half of this year were mainly affected by three factors: First, the domestic epidemic at the beginning of the year affected market expectations, causing RMB depreciation and exchange rate fluctuations; second, the spread of overseas epidemics has impacted China’s foreign trade and other fields, and the current situation The decline in income has promoted the depreciation of the renminbi; third, the U.S.'s aggressive move of "cutting interest rates to zero + unlimited quantitative easing" in March has aggravated panic in the international financial market, and the exchange rate market has fluctuated.

  After entering July, the RMB has generally appreciated. Since July 10, it has broken through the psychological barrier of "7" for many consecutive days. On July 22, the central parity of the RMB against the US dollar once reported to 6.9718, rising to the highest value since the second half of the year. As a foreign trade company, this year due to the impact of the new crown pneumonia epidemic has led to a severe recession in the world economy. In addition to the impact of multiple factors such as reduced orders, shrinking external demand, and blocked supply chains, the pressure on RMB appreciation in the second half of the year will increase. For the general trend, we must pay attention to the impact of changes in international market exchange rates on the subsequent development of foreign trade business and respond in a timely manner.

  The exchange rate is of great significance as an economic lever for macroeconomic regulation in the development of the national economy. Under normal circumstances, the appreciation of the renminbi has the advantages of attracting foreign investment and alleviating the pressure of foreign debt, which can effectively promote the resolution of domestic employment problems and may drive the growth of domestic production and consumption levels. Despite the severe impact of the epidemic in the first half of the year, after full prevention and control, China's economy has gradually recovered and is basically gearing up. As the U.S. epidemic has worsened, economic and employment recessions have become more serious. Other major economies have generally weakened economies. The U.S. dollar has overissued and accelerated depreciation. In addition, China’s domestic capital market has rebounded and foreign capital has accelerated into China. Multiple factors have combined to promote the RMB exchange rate. Get out of the appreciation trend. In the context of the epidemic's impact on global and international trade already showing a severe contraction, the appreciation of the renminbi in the second half of the year will have greater impact on foreign trade companies.

  The appreciation of the renminbi will weaken the price competitiveness of export products to a certain extent and inhibit product exports. The particularity of the epidemic and the differences in economic conditions and macroeconomic policies of various countries have made the current foreign exchange market in a more sensitive period. Therefore, the trend of foreign exchange in the second half of the year will also be more complicated. From a trade perspective, only by finding an equilibrium point in the RMB exchange rate against the US dollar can it bring benefits to both imports and exports. It is generally hoped that the renminbi will not continue to appreciate sharply, and that fluctuations can be controlled above and below the 7 mark, which will help foreign trade companies to properly respond.

  For small, medium and micro foreign trade enterprises that mainly export labor-intensive products and low value-added products, due to their low profit margins and weak anti-risk capabilities, the impact of RMB appreciation is more direct and obvious, especially when they have been In the context of the severe impact of the epidemic, foreign trade companies must strengthen risk research and judgment, be good at using financial tools, and plan ahead to resolve exchange rate fluctuation risks. Through the method of locking the exchange rate, after the product is exported, it immediately signs a forward foreign exchange settlement and sale agreement with the bank, and uses the financial instruments such as forward foreign exchange and hedging provided by the bank to hedge risks. Foreign trade companies can also use bank wealth management products to invest in foreign government bonds, funds, foreign exchange and other financial wealth management products, and use financial instruments such as foreign exchange trading, structured deposits, and forward interest rate agreements to achieve hedging and value preservation. In addition, making good use of international financing products and choosing business types such as bills, export bill financing, export credit insurance financing, and forfaiting among the bank’s international financing products are also good choices for dealing with exchange rate risks.