资讯 1 10 英文网 307 Feature 552296 Devaluation or Revaluation of RMB 2015-09-02 15:26:27 yangfang
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Devaluation or Revaluation of RMB
2015-09-02

Muqeet Bokhari of Icotton.Ltd has BBA & MBA degrees from USA and been associated with the textile industry for over 21 years & currently based in China. He has hands on experience of running and working in ginning, spinning, knitting and weaving industries. He also has global exposure of developing textile related businesses.  

 

Global economic players have been fluctuating their currencies for the benefit of their economies.  Historically, the US has been the main player and has controlled currency to a level desired, not only through internal controls but also by influencing countries with huge reserves to keep it floating at levels that are suitable for them.  Since the US Dollar has been the main trading currency its slight fluctuation shakes a lot throughout the world.  

 

Now, China has emerged in the global game of economic might and it is turning into a force which should be wisely acknowledged.  The world has to understand that China holds the largest growing reserves in the world and is also the fastest growing economy and has been so for many years.  Global pressures made China influence their currency in the past as the world was not able to catch up with the pace at which they were developing and feared that they will be left with complete Chinese dominance.  This global pressure, over the years appreciated RMB by around 30%.  

 

If we evaluate the impact of the stronger RMB, it did help China as they during this period transformed from a net exporting country to a very big importer of goods and commodities in order to meet the growing domestic requirements of raw materials and items desired by the increasing income and respective lifestyles of the Chinese.  

 

Stronger RMB left an impact on a few local industries making them less competitive, resulting in closures or shift to other countries.  A drop of approximately 4% in the value of the RMB, against the US Dollar may have multiple reasons, but it seems that one is a free hand to the currency to position itself without influence.  This will have both positive and negative impacts on businesses.  One of these businesses is textiles and it was among those which lost grip on global markets, due to the stronger RMB.  

 

In the current situation with huge cotton inventories in hand and global cotton crop size, this will possibly have a positive impact for the local Chinese textiles.  This may also put a halt on relocating/closing down of highly work force dependent industry of the most populated nation of the world.