Apparel exports to be impacted by RMB appreciation
23 Aug '11
1 min read
After Standard & Poor lowered US debt rating, the Federal informed that it would keep the low interest rate policy unchanged. The exchange rate of the RMB against the US dollar has moved sharply upwards under the influence of internal and external factors.
Meanwhile, a number of international and domestic institutions have are anticipating a further increase in appreciation of RMB exchange rate and expect the central parity of RMB against the US dollar to at least increase by 5-6 percent this year.
Industry studies suggest that every one percent appreciation of the RMB against the US dollar would mean 4 to 6 percent decline of profit margins from sales of textile and apparel industry.
If the RMB appreciates by 5-10 percent, it could mean even the profit making companies slipping in to losses. The apparel industry with higher dependence on exports will feel a higher impact of the appreciation.