If in the past the textile people have to worry about the depreciation of the renminbi, then after a longer period of time, all they have to worry about is the appreciation of the renminbi.

Textile people know that the appreciation of the exchange rate is conducive to imports, not conducive to exports, at this stage because of overcapacity, foreign trade export profits have been repeatedly compressed, whether it is the traditional European and American markets, or Southeast Asia, the Middle East and other emerging markets, as long as it is a relatively mature market, the internal volume is very serious, profits are greatly compressed.

In the cycle of interest rate hikes and interest rate cuts by the Federal Reserve, exchange rate fluctuations tend to be more violent, compared with the renminbi is still relatively small fluctuations of currencies, such as the yen exchange rate fluctuations of more than 60%.

After entering the rate cut cycle, the depreciation of the US dollar has become a recognized general trend, and before the foreign trade was not forced to settle foreign exchange, and because there is an interest rate difference of about 3% between China and the United States, and the US dollar is relatively strong, it is profitable for funds not to settle foreign exchange, so there are a lot of foreign trade funds left overseas without settling foreign exchange, and the market estimates that these funds are in the hundreds of billions of dollars. There are also aggressive estimates that these funds will reach $2 trillion. But in any case, it's a lot of money. There is huge depreciation pressure on the US dollar in the future, and the interest rate spread of about 3% can no longer cover the depreciation risk of the exchange rate. A large amount of funds have been settled in foreign exchange, and the sharp appreciation of the RMB since July is largely due to this reason. This trend is likely to continue for some time to come.

But the textile people do not have to worry too much, because after the Federal Reserve cut interest rates, the dollar index is weakening, and not only the renminbi, but also the currencies of other countries will also appreciate, or even appreciate more than the renminbi. Even interest rate cuts lead to capital outflows, and overseas purchasing power will even increase after monetary easing. However, in the process of exchange rate changes, the foreign trade exports of textile enterprises may be greatly affected.

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