RMB Exchange Rate Cut 378 Basis Points To Accelerate Depreciation

The Yuan's fluctuation has increased. The first three trading days of the year were nearly 1% against the US dollar and 2.43% against the yen.

The central parity of RMB against the US dollar has dropped sharply for 7 consecutive days. Yesterday, the central parity of RMB dropped by 145 basis points, to 6.5314, the lowest since April 2011. In the first 3 trading days of 2016, the RMB against the US dollar decreased by 378 basis points, and the depreciation accelerated markedly. Spot exchange rate market, reflecting the amplification, the 3 trading day exchange rate fell over 600 basis points, or nearly 1%, yesterday broke through 6.56. The offshore market responded more sharply. Offshore renminbi fell more than 700 points, breaking through the 6.71 barrier, the lowest since the establishment of the offshore market in 2009, the biggest decline in August.

　　 RMB rate Downgrading has made overseas purchasing a headache, but for many exporters, it is a great advantage.

The fluctuation of the RMB exchange rate has made the enterprises with more foreign debts, such as banks, real estate, aviation, shipping and so on, become the biggest victims. However, overseas assets, high-end import substitutes and export companies are expected to get the excess exchange earnings.

Yesterday, the central parity of RMB dropped by 145 basis points, to 6.5314, a record low since April 2011. As of the end of the afternoon, the onshore RMB against the US dollar closed at 6.5575, down 0.58%, a new low since the end of March 2011, while offshore yuan fell 770 points yesterday, breaking through the 6.71 pass.

In the international currency market, market Despite the global economic slowdown, the pressure on the domestic stock market and the fact that the Middle East situation has not yet been alleviated, there is still a risk aversion in the market, and the yen keeps rising.

The depreciation of yen has increased.

Yesterday, after the central parity of RMB was released, the offshore renminbi depreciated rapidly against the US dollar. At the time of press release, the offshore renminbi fell more than 700 points, breaking the 6.71 barrier, which was the weakest exchange rate since the establishment of the offshore market in 2009, the biggest decline in 8 months.

It is worth noting that the yen climbed again yesterday, and the Japanese yen jumped to nearly 3 month high of 118.38 against the dollar, and rose to several months high against other major currencies. In the first 3 trading days of 2016, the spot exchange rate of RMB against Japanese yen dropped from 5.3955 to 5.53, or 2.43%.

Wang Tao, chief economist at UBS, pointed out: "now the central bank hopes that the market will pay more attention to the RMB exchange rate index, rather than the trend of the renminbi against the US dollar."

RMB fluctuations return to normal

Liu Dongliang, an analyst at the China Merchants Bank Asset Management Division, pointed out that the term "tumble" of the renminbi is not accurate. Even considering the recent fluctuations in the 3 days, the average daily fluctuation of the RMB exchange rate is only 0.3%~0.4%, which is a regular fluctuation for the international foreign exchange market, that is, the daily average volatility of the multiple mainstream currencies can reach about 0.5%.

There is still devaluation pressure during the year.

Liu Dongliang said that the judgment of the continued depreciation of RMB 5%~10% during the year depends on the intervention of the central bank to the market and the stabilization of China's economy.

Yesterday, Credit Suisse lowered the Yuan's estimate and lowered the RMB estimate in 3 months, from 1 US dollars to 6.5 yuan to 1 yuan to 6.62 yuan, which was reduced 12 months later, the RMB estimate was reduced from 1 US dollars to 6.57 yuan to 1 dollars to 6.78 yuan.

We can exchange dollars for exchange rate lockout.

"In the face of the devaluation of the renminbi, there is no need to panic too much." Foreign exchange financial experts say that if consumers have practical needs, such as children studying abroad and outbound tourism, it is suggested to exchange money as early as possible; if assets are large, the allocation of overseas assets should be allocated. "For ordinary consumers, we can also consider investment channels such as stock market, financial products and property market, so as to offset the risk of exchange rate depreciation."

For foreign exchange demand enterprise For example, Liu Dongliang, an analyst at China Merchants Bank, pointed out that at present, the risk preference of large central enterprises and state-owned enterprises in dealing with the exchange rate is too low to adapt to the future exchange rate risk. The marketization of exchange rate will play a forced mechanism on them, forcing the risk preference of large enterprises to exchange rate derivatives. The increase of market volatility and the increase of risk are conducive to the innovation of the exchange rate derivatives market, and it is expected that the new varieties of foreign exchange futures and so on will be speeded up. Financial experts pointed out that enterprises can lock in the long-term exchange rate to fix corporate profits and avoid risks.

Export impact

Exporters earn the difference in export volume.

Reporters learned that with the accelerated depreciation of the renminbi, the Chinese companies who have borrowed heavily into US dollar debt in the past few years will begin to redeem their debts in advance, so as to reduce exchange rate risks.

As for the recent downward trend in Renminbi, exporters engaged in export trade have expressed great benefits. In Shenzhen, the boss of exporting glasses business in Europe and America told reporters that "now exports are settled in US dollars, and the US dollar has risen to the equivalent of more yuan. It is a good thing for us to buy more raw materials in China." But the rise in the US dollar is not necessarily a good thing for some non US dollar customers.

Mr. Ren said that some of his clients in Columbia or Australia, because of the recent rise in the US dollar and the decline in their currencies against the US dollar, many people are a wait-and-see attitude, preferring to wait first. If the exchange rate is not cost-effective, we will continue to wait.

Liu boss, who is engaged in the export of machinery parts in Shenzhen, told reporters that because of the increase in exchange rate, they will reach an agreement on the contract for long-term cooperative customers. If the exchange rate fluctuates within a certain range, the price fixed by each other will remain unchanged. If the fluctuation of the exchange rate exceeds a certain limit, the two sides will bear some risks. Liu boss frankly said that because the exchange rate of the US dollar has increased sharply against other countries' currencies, the pressure of other countries' customers will be greater and the demand will be reduced, and the sales volume will also decline.

Consumption impact

Exchange rate changes, big purchase, one price per day.

"The exchange rate has risen to a new level today, and all the quotations will be cancelled before the price is reassessed." Yesterday, Xiao Huang, who had been buying for many years in Hongkong, was updated in WeChat's circle of friends. She told reporters that her purchasing price was the Hong Kong dollar's original price plus the 10%~20% plus cost. "Now the RMB falls more than 100 points a day, and the purchasing price is changing every day. A few days ago, a skin care product was counted less than RMB 1000 yuan. Now basically no 1100 yuan can be bought."

Reporters found that the Hong Kong dollar was linked to the US dollar, so the Hong Kong dollar has risen and risen in recent days. Since last year, the central parity of the Hong Kong dollar has risen by nearly 7%, and the yen to the central parity of RMB has also risen by 7%.

Miss Zhang, who was engaged in Japanese purchasing, told reporters yesterday that the Japanese yen has been soaring recently, and the price quoted to customers daily is different. "Sometimes there is no spot, the price is earlier, and it can only earn less." a week ago, Miss Zhang took a more than 20000 yen list, but she wanted to concentrate on procurement and delivery. Recently, when she bought it, she found that the yen had been rising. It only needed more than 1000 yuan to buy things. It took 1100 yuan for a week to buy it. "In advance, the price was good with the buyers, many were not in stock, and when they bought the exchange rate later, they had already risen."

Tourism market

The price of Japanese tour before the festival is not affected yet.

Guangzhou daily news (reporter Guo Xiaohao) yesterday, the yuan to the yen latest price reported 18.0799 yuan, the exchange rate fell 0.97%. In the first 3 trading days of this year, the RMB exchange rate dropped to 2.43% against the yen. The industry is worried that this will affect the upcoming spring festival tourism season. However, reporters from a number of online travel websites learned that the exchange rate changes will not immediately affect the tourism market, the current Spring Festival Japan travel booking is still hot, but the future may have an impact on the prices of Japanese local hotels.

Yesterday, the renminbi continued to fall against the yen. Some people in the industry thought that the upcoming spring festival tourism season may be the first to be affected by the change of exchange rate: "in recent years, the Japanese tourism is a hot topic of winter travel abroad, and domestic travelers may consider the exchange rate problem and change the itinerary plan."

However, reporters from a number of online travel websites to see that the price of Japanese travel has not changed. A salesperson told reporters: "next there are many lines of products with surprise, regardless of price or experience is worthy of attention."

"Although the trend of RMB exchange rate against the US dollar and yen has fluctuated in recent years, the fluctuation of exchange rate has not been reflected in the price of products in a timely manner because of the fact that many tourism products are purchased ahead of schedule." The person in charge of Ctrip Ctrip told reporters that the price fluctuation of recent US tour and Japanese tour is not big.

Road cattle official said that the current market in Guangzhou and Shenzhen during the Spring Festival is almost the same as in previous years, but after the winter vacation to the Spring Festival (before ~2 January 20th 1), the Japanese travel is particularly hot. The sales routes of the cattle outlets at the way cattle have been sold out: "after the Spring Festival," the peak travel "is very hot in Japan, but it is still not comparable to that before the festival.

A share effect

Foreign debt accounted for most of the housing enterprises and foreign exchange losses.

Fluctuations in the RMB exchange rate make home appliances, textile and clothing industries and overseas businesses larger companies, but foreign debt is relatively large, and the companies that rely on imports are more worried, such as aviation and some Real Estate Company.

Airline profits are eroded.

"The RMB exchange rate has fallen so much that it has been a big problem for enterprises that borrowed foreign debt and did not lock in foreign exchange," a senior investor said. Fluctuations in the RMB exchange rate, external debt such as aviation and shipping, and some enterprises which rely heavily on imports will become the biggest victims. The performance of A share related listed companies will also be significantly affected.

The drop in oil prices has made aviation stocks a star of A shares. China Air China and southern airlines have been soaring, but in the context of continued low interest rates, airlines may have to face greater pressure because of higher dollar liabilities.

Li Huiyong, chief analyst of Shen Wan Hongyuan, said that the higher the proportion of US dollar loans to total assets, the more debt the company needs to use more renminbi to repay its debts after maturity. In particular, the higher the proportion of short-term loans in the US near the cash payment period, the net profit will be affected and the cash flow may also be affected. In the three quarter of last year, the financial cost of China Southern Airlines increased by 4 billion 595 million yuan, which was affected by the fluctuation of the RMB exchange rate. The exchange loss reached 4 billion yuan, which offset many favorable effects caused by the overlapping of oil prices in the traditional peak season.

Foreign borrowing housing prices will be affected

At the same time, some real estate listed companies will also be affected. "Over the past few years, the financing of mainland Real Estate Company has been restricted, leading to a large number of developers to raise funds abroad. With the repayment period approaching, the low RMB exchange rate will make these developers pay a higher cost. A bank official told the Guangzhou Daily reporter.

It is also estimated that the dollar debt of Companies in audio-visual equipment, mining, electronic, petrochemical and other industries is relatively high, and short-term cash flow and performance are under pressure.

Three types of enterprises are expected to get excess exchange earnings.

Although the RMB exchange rate is low, some airlines and other enterprises are very uncomfortable, but it is good for owning overseas assets, high-end import substitutes and export oriented companies, and some companies will get excess exchange earnings.

In the view of professionals, assets of overseas assets will be passive "appreciation" after the depreciation of the renminbi, and the value of Renminbi assets denominated in Renminbi will increase. Data show that such companies are mainly concentrated in overseas large scale acquisition of mineral, energy and overseas business accounted for a larger proportion of the company. A share listed companies include middling resources, intercontinental oil and gas, PetroChina, Herman technology, China Industrial International, Sinosteel international and so on.

Because of the low exchange rate of RMB, the rising import cost will directly benefit the domestic high-end manufacturing, bio medicine and other companies with potential import substitution. A share listed companies are Chutian technology, Boshi share, Sino yuan Concord, Da'an gene, and Furui shares.

In addition, exchange rate changes will also bring substantial benefits to export oriented companies. Among them, the export revenues of the goods will be significantly higher than those of the high military industries, household appliances, computers, textile and clothing and light manufacturing industries. For example, the ratio of export oriented home appliance companies to export is very high, and many companies earn more than 30% of their overseas revenues. Vanward electric exports accounted for 36.71%, ASD's exports accounted for 43.17%. And the leading proportion of the domestic small household appliance group is 30%. Service exports will also benefit. For example, the overseas projects of China construction engineering contracting service companies represented by China Industrial International, Sinoma International and Gezhouba Dam are often denominated in US dollars, which will directly benefit the RMB exchange rate going down.

US dollar debt due ahead of next year.

It is worth noting that the RMB exchange rate volatility will increase the financial pressure of the related enterprises. Some companies quickly repay their debts or redeem the financing bills in advance. Therefore, analysts say that if the exchange rate continues to fall in the future, more companies will not be able to repay their debts ahead of schedule.

In January 5th, Eastern Airlines announced that in order to optimize the debt structure of the company and reduce exchange rate risk, it recently repaid the US dollar debt principal amount of US $1 billion to reduce the US dollar debt ratio. According to the company's earnings report, as at the end of 6 in 2015, the foreign currency financial assets of eastern airlines were RMB 3 billion 204 million yuan, of which 85.92% of the US dollar financial assets and foreign currency financial liabilities amounted to 84 billion 951 million yuan, of which the proportion of US dollar financial liabilities was 97.45%. Foreign currency liabilities are larger than foreign currency assets, making the exchange rate gains and losses generated by foreign currency liabilities conversion larger when the exchange rate fluctuates significantly, which will affect the profitability and development.

In January 6th, Zhong Jun, a listed H-share listed company, also announced that it would redeem the $350 million senior notes due in 2017. It is known that the 2012 outstanding trustee will redeem all outstanding 2012 notes in February 4, 2016.

Statistics show that the outstanding balance of US dollar debt, including bonds and loans issued by Chinese financial institutions and enterprises, is about $581 billion 400 million. Among them, the real estate industry accounts for about 13.2%, the exploration industry accounts for about 13%, and the aviation industry accounts for about 1.3%. Therefore, under the background of the continuous fluctuation of RMB exchange rate, no more companies will choose to repay the loan ahead of schedule.