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RMB appreciation negatively impacts Chinese textile sector
May '13
The exchange rate of the Chinese currency Renminbi (RMB) against the US dollar stood at 6.1904 yuan on May 22, which was the new high for the second consecutive day since the foreign exchange reform was carried out by the Chinese Government, according to the data from China Foreign Exchange Trade Centre.
Since the currency exchange reform in 2005, the Chinese textile and garment exports are being negatively impacted by RMB appreciation, as it eats into profit margin of entrepreneurs, according to experts.
They add that RMB appreciation also results in decline in procurement cost of raw materials, but it is not sufficient to compensate the decline in sales prices of finished products, when calculated in RMB.
They estimate that the operating profit of cotton textile industry declines by about 12 percent, when the RMB appreciates every one percent, while the profit of wool textile industry decreases by about 8 percent, and that of apparel industry by approximately 13 percent.

Fibre2fashion News Desk - China

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