Well if you are the Chinese exporter you will pay attention to the USD RMB exchange rate because it dropped nearly 10 percent since the end of last year, which equals some company’s profit. You will feel the price increased when you are purchasing from China and the main explanation is the USD RMB exchange rate.
The rate was pretty close to 7 at the end of last year, highest at 6.999, and everyone believed there is no doubt the USD RMB exchange rate would pass 7 in a month. Image the owner or the sales director made the plan confidently when they get back from Chinese New Year, having a great expectation of the exporting business by the benefit of the exchange rate. What happened was just the opposite.
Why the USD RMB exchange rates impact the business? The simplest reason is the exporters earn money in USD, spend money in RMB.
USD still is the most popular currency even though RMB is always trying to gain the reputation. The Chinese exporters receive payment of USD from clients; spend RMB to pay everything in China. 1000 USD equals 7000 RMB in last year, now only 6500; price increasing is the only solution. Not every buyer could accept it.
For now no one could give the prediction of the USD RMB exchange rate although someone said it would keep stable at 6.2, it looks reasonable because it dropped again on today which is 6.57, at least it is approaching. What we expect is the rate could keep stable at a relatively high position, we don’t even know how to quote our clients.