Home / Knowledge / News / Voices in favour of RMB depreciation get louder
Voices in favour of RMB depreciation get louder
08
Jan '09
An entirely free floating exchange rate of the RMB will still have to wait for some more time, but the unexpected international financial crisis has disrupted the pace of RMB exchange rate reform. Poor demand in international market has created steep pressure on exports of Chinese enterprises since July 2008 and voices in favour of a free floating RMB have got louder.

A survey made by Reuters in December 2007 had expected that one US dollar would fetch 6.84 Yuan in exchange by the end of March this year, 6.83 Yuan by the end of June, and 6.80 Yuan would be exchanged into one U.S. dollar by the end of December.

From the second half of 2008 onwards, orders from overseas markets have substantially reduced due to the drag of the financial crisis and business failures in the Yangtze and the Pearl River Delta are growing. In addition, since the beginning of the exchange rate reform in July 2005, the RMB has revaluated by nearly 20 percent.

This has significantly eroded profits of enterprises and the ones who were operating on very low margins have got in to serious trouble with all of them expected to face more disasters if the RMB appreciation was to continue in the current year. However, most domestic foreign exchange analysts believe that the RMB is more likely to decline throughout the year.

A report from Haitong Securities Research Institute points out, in accordance with the purchasing power parity (PPP) which is calculated by ratio of commodity prices in different countries, one dollar should fetch 7.55-8.00 Yuan, but in accordance with the interest rate parity, RMB depreciation rate against the U.S. dollar could reach 49.7 percent in the future.

The RMB is expected to maintain a relatively stable trend amid consolidation during most of the time in the current year, though the Yuan might moderately decline to alleviate export pressure, if economic situation continues to deteriorate and might devaluate by less than 3 percent.

Fibre2fashion News Desk - China

Must ReadView All

Textiles | On 22nd Feb 2017

India to produce 341 lakh bales cotton in 2016-17: CAI

The Cotton Association of India (CAI) has maintained in its January...

Apparel/Garments | On 22nd Feb 2017

Amazon UK to create 5,000 full time jobs this year

Amazon UK said it will create more than 5,000 full time jobs this...

Textiles | On 22nd Feb 2017

Telangana CM seeks better life for handloom weavers

Chief minister of Telangana, K Chandrashekhar Rao assured handloom...

Interviews View All

Mandeep Nagi
Shades of India

Women value something that is unique and has a flavour of India

Victor Chao
Esmetex

‘In future, clothing boundary lines will become increasingly blurred.’

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
February 2017

February 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search