Why RMB Appreciation Affects Shoe And Clothing Enterprises 1

Since the announcement of China's reform in June 19, 2010, the central parity of the RMB against the US dollar has been growing rapidly.

Nevertheless, the renminbi will not appreciate once again. It is still a consensus between the government and the market.

The revaluation of RMB exchange rate and the effect of slow appreciation on asset price revaluation will inevitably attract the inflow of hot money, which in turn will promote the further appreciation of RMB.

With the expected appreciation of RMB appreciation, the industries closely related to it begin to be concerned by investors.

According to the analysis of the market research center of the Securities Daily, it is found that the appreciation of RMB has great influence on the five major sectors, such as real estate, aviation, textile, paper making and gold, and each has its own investment opportunities.

According to the industry estimates of 9 of the enterprises, once the appreciation of the renminbi, will be significantly affected.

At the same time, some professionals estimate that if the RMB appreciates 3%-5%, China's export oriented small and medium textile enterprises will not make any profit.

It is understood that since the reform of the RMB exchange rate formation mechanism in July 2005, the renminbi has been appreciating slightly.

In April 10, 2008, the central parity of RMB against the US dollar broke 7, and entered the "6 era".

Since the beginning of this year, the central parity of RMB against the US dollar has been running in the range of 6.826 to 6.828.

In June 22nd, when the central bank resumed the second trading day after the reform, the central parity of RMB against the US dollar was 6.7980, breaking the 6.80 pass.

Affected by the appreciation of the renminbi, such as household electrical appliances, electricians, automobiles, steel and textiles, and other labor intensive industries.

As for the textile and garment industry with the largest impact, the industry has estimated that up to 9 of the enterprises will have a significant impact once the RMB appreciates.

Zhou Shijian, a senior researcher at the Sino US Relations Research Center at Tsinghua University, estimates that at least 25 million of the employment crisis in the textile and garment industry alone does not include companies other than the scale and those outside the textile and garment industry.

"Employment is directly related to social stability, which is the biggest threat to RMB appreciation."

Insiders said that the appreciation of the renminbi would be a trend, and the central parity of RMB against the US dollar in the whole year.

It is not the right time for export oriented textile enterprises to complain about the appreciation of the renminbi. "The impact of the financial crisis has not yet resumed.

According to experts estimates, if the RMB appreciation is above 3%, the profit of China's small and medium-sized textile enterprises with export will probably turn to zero.