On May 28, the People ’s Bank of China authorized the China Foreign Exchange Trading Center to announce that the central parity rate of the RMB against the US dollar was reported at 7.1277, a decrease of 185 basis points from the previous trading day and fell below the 7.12 mark. On the evening of May 27, the offshore RMB exchange rate against the US dollar once fell below the 7.19 mark.
China is one of the world’s largest importers of commodities, and the import demand for raw materials such as crude oil, iron ore, soybeans and wood is also high in the world. So once the RMB depreciates, it will increase our country. The import cost of imported bulk commodities will also increase the price of domestic commodities in China, especially some commodities signed in short-term import contracts. In this case, the increase in import costs will be obvious.
In the short term, the US dollar index remains high, and it is difficult for the RMB exchange rate to appreciate significantly. Under the background of trade friction and risk-averse demand, there is even some depreciation pressure. There is a certain reverse relationship between the US dollar index and the RMB currency value. When the US dollar index is strong, the RMB does not have a basis for substantial appreciation. Therefore, the US dollar index is high and volatile.
In the face of rising freight rates and falling exchange rates, the cost for Chinese timber importers continues to rise, and prices in the end market have remained sluggish in China. The current cost increase is particularly important in the price downturn. Timber trade involves many aspects such as overseas procurement, international logistics, warehousing, cross-border settlement, etc. Whether this situation will slow Chinese timber imports is at the moment difficult to predict.
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