Burst! Offshore, Offshore RMB Double Broken "7" Textile And Other Sectors Welcome Good.

The Federal Reserve cut interest rates again after ten years, and the global capital market ushered in a "storm". It is difficult for the RMB exchange rate to be independent.

In August 5th, the central parity of RMB against the US dollar was 6.9225, down 229 points, and the middle price depreciated to the lowest level since December 3, 2018. The median price for the last trading day was 6.8996, the official closing price for the previous trading day was 6.9416, and the night plate was 6.9420.

Around 9:16 a.m. on August 5th, the offshore RMB against the US dollar fell below the "7" barrier, and as at press time, it was 7.0398.

Subsequently, the offshore RMB against the US dollar also fell below 7 yuan, up to 7.0250.

The central bank announced that at present, the total liquidity of the banking system is at a reasonable level, and the reverse repurchase operation is not carried out today. Because today's non repurchase buyback expires, zero turnover will be realized on that day.

Why do many people fear that the US dollar will break 7 against the RMB exchange rate?

The 7 of the RMB exchange rate is a test of confidence in the market: less than 7, indicating that the RMB exchange rate is generally in a controllable and stable range; more than 7 indicates that cross-border capital flows, imports and external reserves will have varying degrees of turbulence.

In fact, 7 and 6.9 or 7.1, from the exchange rate, there is not much difference, the difference between them, the most important thing is a psychological price and market behavior.

The RMB exchange rate also follows such a psychological logic. As long as the exchange rate control is less than 7, the market's expectation of RMB depreciation will not be too great. Once the psychological barrier is broken through 7, the market will think that the RMB will have great depreciation in the future, and the market has always been catching up and killing. Once the RMB breaks through the 7 threshold, there will be a lot of money to make short for the RMB. At that time, our country's exchange rate control may even fail. Once the foreign exchange control fails, the pressure of RMB depreciation will rise sharply.

In May 26, 2017, the central bank launched the intermediate price counter cyclical factor for the first time, and the RMB yuan continued to strengthen against the US dollar. The RMB basket exchange rate also bottomed out and rebounded strongly. By January 2018, when the exchange rate of RMB against the US dollar rose from 6.88 in May 2017 to 6.44, the central bank announced the suspension of the countercyclical factor. After several months, the exchange rate of RMB against the US dollar rose to 6.2-6.3.

In July 2005, China began to adopt the floating exchange rate system. Since then, the reform of the RMB exchange rate regime has been opened. The floating exchange rate has released China's growth dividends over the past decades, and the renminbi has appreciated all the way. By August 2008, the exchange rate of RMB against the US dollar has risen from 8:1 to 6.8:1, the appreciation rate is as high as 15%, and is hovering near the 7 pass.

Two, is RMB breaking 7 a good thing or a bad thing?

Tan Yaling: it is necessary to argue clearly whether the RMB "breaking 7" is a good thing or a bad thing.

As for the future trend of RMB, Tan Yaling, chief economist of China Foreign Exchange Investment Research Institute, pointed out in mid July that we should evaluate the exchange rate from the perspective of the market, so that the preparation of the enterprises will be relatively full. At the same time, it is necessary to argue clearly whether the "7 break" of RMB is good or bad. If the past is too sensitive, it should weaken its sensitivity.

Tan Yaling pointed out that the range of the fluctuation of RMB will be larger and larger, and the test for enterprises will also be bigger and bigger. We should evaluate the exchange rate from the angle of market, so that the preparation of enterprises will be relatively full.

Sheng Songcheng: at present, the RMB exchange rate breaking "7" does more harm than good.

Sheng Songcheng, former director of the investigation and Statistics Department of the people's Bank of China, wrote in May that the current RMB exchange rate breaking "7" is more harmful than profits. If the exchange rate falls below the key point, it may have a greater impact on market confidence and increase the pressure of capital outflow. It may even be "giving people the right handle" in the future Sino US negotiations on trade, making the problem more complicated, resulting in the escalation of trade frictions.

At present, the United States has not classified China as a currency manipulator. In fact, the US dollar does not want much depreciation of the renminbi. Moreover, we can not continue to rely on low prices to gain competitive advantage. Letting the renminbi depreciate will hardly motivate enterprises to improve their product quality and enhance their core competitiveness. Of course, we should not allow the exchange rate to appreciate substantially. We should avoid overshooting the RMB exchange rate in the direction of appreciation.

At present, the Central Bank of China insists on prudent monetary policy to tighten up moderately, to control the total supply gate of money supply, not to carry out "flood irrigation" while maintaining a reasonable and abundant liquidity. The growth of broad money M2 and social financing scale should match the nominal growth rate of gross domestic product. The combination of prudent monetary policy and positive fiscal policy has promoted the growth of domestic demand, and is conducive to the export and GDP growth of our trading partners. It is also conducive to domestic risk prevention, reform and steady growth. It also helps to avoid asset price bubbles and lead to negative spillover effects.

Yu Yongding: RMB exchange rate breaking 7 will not bring disaster?

Yu Yongding, a member of the Chinese Academy of Social Sciences, said that in order to maintain the independence of monetary policy and maintain economic growth, China may adopt further monetary easing policy. Once we have adopted such a policy, sooner or later, we will again face the question of allowing the RMB to break 7. In Yu Yongding's view, the RMB exchange rate will not be catastrophic from 7 to 7.1, and the exchange rate should be swayed around 7.

"At present, the macroeconomic situation calls for greater flexibility in exchange rates." Yu Yongding pointed out that unless foreign trade and economic growth situation improve, China will sooner or later implement more relaxed fiscal and monetary policies, and such policies will conflict with the "7 guarantees" goals.

In his view, worrying about breaking 7 of the yuan will bring disaster. And Yu Yongding did not believe that if we let the RMB break 7, there will be panic, a lot of capital flight, and the situation is out of hand. He believes that China's current account surplus, there will be no great pressure on foreign exchange.

Yu Yongding said that capital flight was not as easy as in 2015 and 2016, and that cross-border capital flows were legal. For example, foreign capital repatriated profits and foreign capital divestment was legal and no problem. But this is a relatively long term decision, and foreign capital will not take away a lot of profits in a short time.

Yu Yongding explained that in the world economy, prices are a lever of adjustment, and so is the exchange rate. Exchange rate is a stable capital flow and stable cross-border financial flows, making our current account and our capital account, in general, an important adjustment mechanism to balance the balance of payments.

"Now let it sway between 7, 7.1 and 7.2 back to 6.9, so it will not be a big problem to shake everyone's heart." If the situation worsens, we need a large-scale stimulus policy. "Instead of waiting for that time to break 7, it is better to let it shake at 7 now, which is controllable. We should use the more natural psychology and relaxed psychology to look at the fluctuation of exchange rate. 7, 7.01, 7.02 are not different from 6.9 and 6.95. We should have confidence in China's economic development. "

Three, the RMB to break 7 textiles and other sectors welcome good.

The devaluation of the RMB has a broader impact on the market.

1, international gold inflation

International Gold broke $1450 mark, rising 0.7% during the day. The gold stocks of risk aversion were heated up, the hang Bang shares rose more than 8%, Yintai resources, Shandong gold rose more than 5%, Hunan gold, Chifeng gold, CICC gold and so on followed by rise.

2, textile and other sectors welcome good.

The depreciation of the renminbi constitutes a great advantage for exports. Generally speaking, Textile (RMB depreciated 1% per cent, sales profit margin of textile and garment industry increased 2% to 6%) Home appliances, overseas projects (overseas contracts are mostly denominated in US dollars, RMB denominated units) and overseas businesses will be more directly benefited from the depreciation of the renminbi.

Export oriented footwear and footwear stocks rose sharply in the morning. Among them, the leading shares are Huafang shares and Sino submarine textiles trading, and Jiaxin silk and phoenix bamboo textile products have increased by more than 4%.

Garment and textile industry is one of the traditional export industries in China. In recent years, influenced by the appreciation of the RMB exchange rate, the rising cost of raw materials and the expansion of inventory, the competitiveness of the whole industry in the international market has been weakened, and the export of textile and clothing has declined year by year. This also makes the share price of textile stocks mostly at a relatively low level in the two cities, and the attractiveness of the whole textile industry has dropped sharply.

The situation has changed since the beginning of this year, and the RMB has obviously depreciated this year. The export competitiveness of the entire textile industry is expected to be enhanced under the stimulation of devaluation. Insiders say that the textile industry has a high degree of dependence on exports. The devaluation of the RMB will help the company reduce costs and enhance the competitiveness of its products, so that enterprises can get more orders. On the other hand, it is beneficial for export oriented enterprises to obtain foreign exchange earnings, which will further stimulate consumption and benefit the export of textile products. At present, half of the textile listed companies in the A share market account for more than 50% of the total export business. According to industry related calculations, the textile and garment industry has benefited from the depreciation of the RMB, and the depreciation of RMB by 1% can raise net profit by 2%-6%.

Today's textile and apparel market in the background of decline, the market is booming, up 0.85%.

The related stocks are as follows:

Huafang shares: the company's main cotton, chemical fiber textile and dyeing and finishing, cotton and chemical fiber products, clothing, clothing production, processing and marketing. In 2018, overseas revenue accounted for 84.16% of total revenue.

Phoenix Bamboo Textile: RMB depreciated by 1% per cent, and sales profit margin of textile and garment industry increased 2% to 6%. The company mainly engaged in knitting weaving, dyeing and finishing, bleaching and dyeing of cheese yarn, shoe production and so on.

Nanfang shares: the main business is import and export trade and domestic bulk trade business, Europe and America accounted for 42.8% of business.

Jialin Jie: the company is a textile fabric production company. In 2018, the semi annual report showed that the company's export revenue was 341 million, accounting for 86% of its operating income.

Hua Sheng shares: Main ramie and bamboo garden fiber textiles, 17 annual report export accounted for 80.9%

Modern Boulevard: CANUDILO, a leading brand of men's clothing, specializes in nine categories of suits, shirts and jackets. In 2018, overseas revenue accounted for 56.50% of total revenue.

Ying Ke medical: comprehensive medical care products suppliers, the main products include disposable PVC and nitrile gloves, etc. in 2018, overseas revenue accounted for 96.39% of total revenue. In May 13th, on the interactive platform, more than 95% of the company's products were exported to foreign countries and settled in US dollars. The depreciation of the RMB will have a positive positive impact on the company's performance.

The same as shares: main security video surveillance products, hard disk recorders, cameras and video surveillance management platform for research and production. In 2018, overseas revenue accounted for 92.97% of total revenue.

Fengshen shares: mainly engaged in the export business of tyres and related technologies produced by our company. The company's products are the main supporting products of transportation and engineering vehicles, and exported to more than 140 countries and regions in five continents, such as America, Europe, and so on. In 2018, overseas revenue accounted for 41.27% of total revenue.

Galactic magnet (superimposed super high speed rail concept), mega new shares (superimposed Bao energy card), Chuan Yi technology, Star Hui precision, Zhejiang Dingli, times new material, Deng Yun shares, Su Jiao branch

China source home: Main sofa development, design, production and sales, product sales mainly OEM, mainly exported to the United States and other overseas markets. In 2017, the overseas market revenue was 782 million yuan, accounting for 99.90% of the total revenue.

Yanjiang shares: the company is a domestic diaper quality company, positioning "innovative global supplier of surface materials", and actively expand the market in India and the United States. In the first half of 18 years, the export volume was 158 million yuan, accounting for 49.5% of the total revenue.

In addition to clothing and textiles, international projects, household appliances, electronic components and so on will also benefit from the depreciation of the renminbi. Along the "one belt and one road", the economic and trade links between the two countries are close, the economy is active and the potential for development is huge. China's investment in the "one belt and one way" country is significantly higher than that in other regions. The large-scale production capacity has led to the prosperity of foreign contracted projects. The proportion of Chinese enterprises in the "one belt and one road" project in the total amount of foreign contracted projects has increased year by year, and now it has exceeded 50%.

The low exchange rate of RMB makes China's export of household electrical appliances more cost-effective in overseas markets, and is conducive to the expansion of Chinese enterprises. At the same time, because most companies use foreign exchange settlement when they sell products, the low exchange rate of RMB can also increase exchange earnings.

Four, how does RMB depreciation affect your pocketbook?

Depreciation of the renminbi generally includes active depreciation and passive depreciation. The active depreciation of the renminbi is usually based on the current macroeconomic situation, and the Central Bank of China actively adjusts the exchange rate of RMB against the US dollar to reflect the depreciation. The active depreciation is a national macroeconomic means, which is beneficial to most of us in the overall situation. The passive depreciation of the renminbi generally refers to the appreciation of other currencies (generally referred to as US dollars), resulting in the automatic rise of the RMB against the US dollar (passive rising), so that the purchasing power of the renminbi becomes weaker and depreciates. Now, from the perspective of our people (individuals or individuals relative to the collective), what are the effects of the depreciation of the renminbi on daily life? The devaluation of the renminbi will result in the following kinds of interests:

(1) shareholders of the stock market. In fact, the trend of RMB and A shares is highly correlated. If the renminbi depreciates, many people will consider changing the money into US dollars, which may lead to the rapid fall of A shares. This is because the depreciation of the renminbi will cause the valuation of local currency assets to decline, leading to the weakening of the relevant sectors of the financial sector (including real estate), and even the overall market decline. On the other hand, once the devaluation of the RMB is expected, it will lead to hot money outflow, and the capital market of A shares is rapidly tightening, resulting in the loss of shareholders. Thirdly, if the RMB depreciates sharply, it may cause the overseas financing enterprises to bear heavier financial burden, thus reducing the valuation of the relevant stocks and thus cutting the meat sales.

(2), the exit group (overseas travel or overseas students). For students studying abroad or studying in the United States, it means the same renminbi, which is much less than before, which will cause financial strain for the overseas group. For these people, it is possible to buy foreign exchange first, that is, to cash all the cash needed before going abroad. You can also bring several credit cards (UnionPay, VISA and MasterCard three sheets) for use, because many people like to travel abroad for credit card shopping. If the RMB is depreciating, the use of credit cards settled in US dollars will be relatively cost-effective. Using Renminbi denominated credit cards, if the renminbi continues to depreciate, it will pay more interest.

(3) the Chinese sea Tao nationality. In recent years, the overseas purchasing market is extremely hot. The price of goods from overseas is generally cheaper than 1/3 purchased at home counters, and some can even get half the price. This is also the reason why the sea group is willing to go far. However, if the RMB depreciates, a lot of Hai people will lose money. For example, if they buy a commodity worth 100 US dollars (RMB 680.18 yuan) from abroad, if the RMB depreciates by 50% (exaggeration is easy to understand), it will need to pay 1360.36 yuan to buy it. This is like the original 3 yuan a pound of Chinese cabbage, RMB devaluation after paying 6 yuan to buy, obviously is not good. Of course, for foreigners, amusing Chinese products will be beneficial.

The following analysis shows how the renminbi devaluation will affect the overall situation:

We all know that advantages and disadvantages are relative. If they are good to some people, they will be bad for others. Just like the import and export enterprises, the depreciation of the RMB is better than the export enterprises. At the same time, it inhibits the development of the import enterprises. At the same time, it is good for export enterprises to be better than those in the export industry, such as double wages. Of course, when the import enterprises are suppressed, the employees who work in the import enterprises will face difficulties. Of course, the depreciation of the renminbi, according to the meaning of "money is not worth", sounds like a bad thing. It's like buying 3 pounds of Chinese cabbage in the vegetable market. After devaluation, it costs 6 yuan to buy it. If it is an ordinary farmer in China, the income can only rely on planting life, and less land will cause "not enough to eat" phenomenon. Of course, this situation is taken into account by the state. For this kind of people, the state has adopted the "subsidy" to make our life more interesting.

(1) the depreciation of RMB will be beneficial to the following categories of people (industry) or the following export industries.

A, textile and clothing. With the depreciation of the renminbi, many domestic export oriented enterprises will get a breathing space. In these export oriented enterprises, textile and garment enterprises will undoubtedly occupy a large proportion. For many textile and garment enterprises that are devoured by foreign exchange links, the depreciation of the renminbi will be one of the most direct means to stimulate their growth.

B, iron and steel industry. Steel walking is an effective way to increase profits of steel enterprises, especially in the case of devaluation of RMB, which will undoubtedly enhance the competitiveness of related steel enterprises.

C, shipping industry. The depreciation of the RMB will stimulate the export of domestic textile industry, which will bring certain benefits to container shipping, thus stimulating the demand for raw materials to drive the air cargo market.

D, purchasing industry. The depreciation of RMB will increase the purchasing cost of import enterprises, but it will be good for export oriented chemical enterprises.

E, automotive industry. The depreciation of the RMB or the attractiveness of the price of imported cars will inhibit the further expansion of import vehicle sales.

(2) the depreciation of the renminbi will have an impact on investors, such as spot, futures and foreign exchange.

The depreciation of a and RMB is reflected in the US dollar exchange rate, while the US dollar exchange rate directly affects the fluctuation of silver price under certain circumstances. Generally speaking, in the spot silver market, the rise of the US dollar (RMB devaluation) will lead to a fall in the silver price, and the rule of silver price rising when the US dollar falls (RMB appreciation). And spot investment can be bought up or down. If the renminbi depreciates, it may become rich overnight for those who buy the right direction. If the direction is reversed, they may lose their fortune.

B and US dollar are strong (RMB devaluation). Generally speaking, the domestic economic situation of the United States is good. Domestic stocks and bonds will be sought after by investors. The function of spot silver as a means of value storage will be weakened. The decline of US dollar exchange rate is often related to inflation and stock market downturn. The value preservation function of spot silver will be reflected again. This is because the depreciation of the US dollar is often related to inflation, while the value of spot silver is relatively high. When the dollar depreciates and inflation intensifies, it tends to stimulate the value and speculative demand of spot silver. The dollar is stronger than silver, and silver is stronger than the dollar.

C and futures are not goods, but they can be reflected through trade. There is a correlation between the depreciation of RMB and the deterioration of terms of trade. At the same time, empirical evidence shows that the expansion of export volume aggravates the deterioration of terms of trade.

The impact of D and RMB depreciation on foreign exchange traders.

Since foreign exchange is a bilateral transaction, a trader can either buy a currency as the beginning of a contract, or sell a currency pair as the beginning of a transaction. Similarly, he can buy or sell currency pairs as the end of the transaction. No matter what goes up or down, it is possible to achieve profitability. That is to say, if the renminbi depreciates, it may become rich overnight for those who buy the right direction. If the direction is reversed, they may lose their blood.

(3) other effects of the depreciation of the renminbi.

For a long time, a large amount of foreign capital has been wandering in China for a long time and has made a lot of money in China. Someone once said such a joke: when an American goes to China to eat and drink and go away, he changes the rest of his money into dollars. After a year, he wants to eat and drink in China. In devaluation, there will be a large number of US dollars entering China into Renminbi assets to avoid the relative depreciation of the US dollar. When these dollars enter, they exist in a certain form of assets. Most of them are buying real estate. One of the reasons for the surge in house prices in the past few years is the continued depreciation of the renminbi. In the process of depreciation, people who own real estate assets appreciate rapidly, but this is not necessarily a good thing. Because if the renminbi depreciates, some investors worry that there will be assets withdrawing from real estate, especially those that have been pouring into the country from abroad earlier. They will be able to flow out of China because of the depreciation of the RMB, or they will not dare to enter the Chinese market any more.

Five, what is the onshore and offshore RMB?

Many people will be Mongolian yen exchange rate and offshore RMB exchange rate, the exchange rate is the exchange rate, how will there be a shore and offshore points?

Geographically speaking, the difference between the shore exchange rate and the offshore exchange rate is the difference between Mainland China and the mainland of China. The exchange rate on the shore refers to the exchange rate on the mainland of China, and the offshore exchange rate refers to the exchange rate outside the mainland of China.

We usually exchange foreign currency, usually in mainland China's banks to complete the exchange, so the exchange rate used is in accordance with the shore exchange rate as the exchange standard.

If there is a need for more official explanations.

The exchange rate: that is, the central bank authorized the China foreign exchange center to announce the RMB exchange rate between the US dollar, the euro, the yen and the Hong Kong dollar on the morning of each working day on the morning of each working day as the reference price for the inter-bank spot foreign exchange market and the bank's OTC exchange rate, which is called the onshore RMB.

The offshore exchange rate: that is, the exchange rate of the central bank's opening up to Hongkong and other countries for renminbi transactions is called offshore renminbi, and the RMB Offshore transaction (CNH) implemented in Hongkong, China in 2010, has generally referred to offshore offshore RMB transactions.

Why do we need to split the exchange rate between the RMB and the offshore? This is because the RMB has not yet fully internationalized, resulting in the difference between the RMB and offshore exchange rates.

1, domestic exchange swap and foreign exchange swap, the price difference between the two markets is large, mainly because of the difference in price formation mechanism.

2, the offshore RMB exchange rate is more volatile because it tends to be more market-oriented and less regulated.

3, the RMB exchange rate on the shore will be affected by the central mama, especially when the market risks, the central bank will maintain the stability of foreign exchange and make some money market adjustments.

The offshore exchange rate and the exchange rate on the shore will interact with each other, and the offshore exchange rate will more reflect the market situation.

At the end of 2016, the yuan fell sharply against the US dollar. Many people thought that the exchange rate was about to break 7. However, we saw the strong exchange rate on the shore, and soon the offshore RMB exchange rate began to rise again.

Because the offshore exchange rate and the offshore exchange rate are different, there will be a difference. Once this difference is too large, speculators can buy it through one bank with low exchange rate and sell it on one side of the high exchange rate so as to sell arbitrage.

At the same time, a large amount of arbitrage will quickly reduce the difference between offshore and offshore exchange rates.

(part of Tencent finance, global textile network consolidation)