Currency appreciation puts pressure on textile exports
02 Sep '11
1 min read
The appreciation of RMB is putting pressure on Chinese textile exports, as the cost of exports increase when calculated in foreign currency, thus making them less competitive.
The continuing trend of RMB appreciation has increased pressure on textile export sector. The Chinese currency, which was trading at 6.8 Yuan against the US dollar in June 2010, has appreciated by 5.88 percent to near 6.4 Yuan at present.
As per the exchange theory, the exchange rate of any country will have to face upward pressure along with the growth and development in the country's economy.
Analyzing the growth of Chinese economy at a rapid pace during the last few decades, experts say, the current RMB exchange rate is comparatively undervalued.
Hence, they expect the current trend of RMB appreciation vis-à-vis other currencies to continue and will likely increase pressure on Chinese textile exports.