Subject: RMB Enter Enter Era of 6
Date: April 10th, 2008
9:15am, 10th April, 2008 is the most highly concerned moment for the foreign exchange market. China’s Foreign Exchange Trading Center was authorized by the People’s bank of China to declare that the exchange rate of RMB against U.S. Dollar is below 7 for the first time, namely, 6.992:1. It means that 1 USD can exchange 6.992 RMB and Foreign Exchange Market enter era of “6”. On the one hand, increased value of RMB is not only reflected in changed figures, but also in macro-economy policy, industry development, import and export trade, people’s financing life, study abroad, and even in traveling abroad.
According to statistics, the value of RMB has been increased by more than 4% since the year of 2008, which shows obviously faster upvaluation of RMB, and increased by over 15% totally compared with 8.11:1 in July, 2005. On May 15, 2006, RMB experienced upvaluation initially being below 8. Then, after nearly one and half year, on October 24th, 2007, the exchange rate between RMB and USD is 7.5: 1. However, RMB value was increased by 0.5yuan, which just takes less than six months.
Generally speaking, the profit margin of chemical material is very small, because the point of competition in international market relys on low price. RMB upvaluation will inevitably result in increased production cost of the entire industry, which will lower product competitiveness, and smaller profit margin.
In any case, Tiptop believe natural selection and survival of the fittest. Only the strong can be in incincible position. The only way for us to seize international market is better price and quality by improving upgrading production processes and lowering cost.
