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RMB revaluation deeply worries exporters
07
Jul '10
It is learnt that since the reform of formation mechanism of RMB exchange rate in July 2005, the Yuan has made small appreciation in the period till date.

This year, the central parity of exchange rate of the RMB against the US dollar has basically ranged between 6.826 to 6.828 Yuan.

On June 22, the second day after the resumption of the reform by the central bank, the central parity of RMB against the US dollar was 6.7980.

The industries being affected by the appreciation of the RMB include labor-intensive industries, such as home appliances, electrical, automotive, steel, textiles and clothing.

The industry estimates that textile and garment industry will face the biggest impact, 90 percent of the companies in the industry will be subject to significant impact, once the RMB revaluates.

Experts estimate that at least more than 25 million workers will face employment crisis in textile and garment industry.

According to industry sources, annual cumulative appreciation of the Yuan against the US dollar may range between 4 to 5 percent.

Export-oriented textile enterprises complain that it is not the right time for Yuan appreciation, the industry has not yet recovered from the financial crisis, export products will have no profit with Yuan appreciation again and they will have to increase product prices.

Experts estimate that China's export-oriented small and medium textile enterprises may become zero profit companies, if the RMB appreciates by more than 3 percent against the US dollar.

Fibre2fashion News Desk - China


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