Recently, exchange rate has been the focus of discussion among cross-border e-commerce sellers. Now, except for the US dollar, all other currencies are falling.
A few days ago, an article published by Huawei in an internal forum called "The entire company's business policy should shift from pursuing scale to pursuing profit and cash flow" is popular all over the Internet. Its founder Ren Zhengfei emphasized in the article "to survive as the main program" and "the survival basis should be adjusted to focus on cash flow and real profits, and no longer just target sales revenue."... A series of views have also gained wide resonance in the seller circle.
For cross-border e-commerce sellers, the change in exchange rate is directly related to the amount of profits. If the exchange rate falls, the profits of tens of thousands or even hundreds of thousands can evaporate in an instant. Judging from the current exchange rate, American sellers can be happy first, but European and Japanese sellers are more uncomfortable. Unlike the US dollar to RMB exchange rate, the euro keeps falling. Not long ago, the US dollar achieved a parity of 1:1 against the euro, which was already surprising. Now the euro has broken the flat rate against the US dollar, falling to the lowest in 20 years. The exchange rate continued to fall, and a group of European sellers were directly mortified.
In fact, in addition to the US dollar area, the exchange rates in the euro area, the yen area and the pound area are all falling. At the beginning, the seller could calmly say that he would put it in the account first and wait for the exchange rate to be slightly better before withdrawing cash. However, the exchange rate has been falling all the way, and the more money is released, the less valuable it is, and calmness becomes crazy. American sellers have also encountered such an embarrassing situation. In the case of unstable exchange rate, it is necessary to formulate a exchange exchange strategy. Especially now that the peak season is approaching, how to formulate a foreign exchange exchange strategy to ensure maximum profits should be a common concern for sellers.
US dollar exchange rate rose to 6.9, can it "break 7" this year?
At present, the US dollar is rebounding strongly.
Today (August 29), the onshore RMB exchange rate against the US dollar fell by more than 270 points, and then continued to fall, falling below the 6.90 mark. At the same time, offshore RMB fell straight against the US dollar, falling below the three marks of 6.90, 6.91 and 6.92. As of 9:34, the onshore and offshore RMB were 6.9071 and 6.9215 against the US dollar respectively.
People's Bank of China authorized the China Foreign Exchange Trading Center to announce that on August 29, 2022, Interbank foreign exchange market RMB exchange rate mid-price is: 1 US dollar to RMB 6.8698.
In fact, since the upward trend occurred in April this year, the US dollar exchange rate has been strengthening. Now most cross-border e-commerce sellers believe that the exchange rate of the US dollar against the RMB is expected to "break 7".
From the source, there are two main factors driving this wave of US dollar exchange rate rise: one is The Federal Reserve raises interest rates ; the other is The People's Bank of China cut interest rates. The combination of the two directly affects the exchange rate market.
htmlOn August 22, the day when the People's Bank of China announced a rate cut, the offshore RMB exchange rate against the US dollar approached 6.82, and the downward trend on the second day (23rd) continued to decline, and continued to fall to 6.8656.Since March, the Federal Reserve has accumulated interest rate hikes 225 basis points. Not only that, the United States, which is fighting high inflation, is planning a new round of interest rate hikes. James Bullard, chairman of the St. E.L. Fed, one of the 12 reserve banks of the Federal Reserve, publicly stated that the Federal Reserve should start hikes of 75 basis points in September.
Some analysts said that the recent continuous decline in the RMB exchange rate against the US dollar is mainly affected by the interest rate cut of the People's Bank of China, and the Fed's expected interest rate hike has not yet played a role.
The following figure combines the timeline of the US interest rate hike, which shows that the effect after the interest rate hike will be reflected in the exchange rate very quickly. For example, the United States began to raise interest rates in March, and the US dollar exchange rate rose significantly in April. Therefore, it can be foreseen that if interest rates continue to be raised in September, the US dollar exchange rate will rise in the next October, or faster.
HSBC Previous forecasts believe that by the end of 2022, the exchange rate of the US dollar against the RMB will reach 6.9 and 6.95 by mid-2023. In addition, most of the year-end point predictions of foreign banks for the US dollar to the RMB are between 6.7 and 6.95.
However, Currently, the US dollar has broken through the highly-watched 6.8 mark against the RMB. With the expectation of a sharp hike in rate hike in , the US dollar exchange rate will reach a higher range in the rest of this year, and it is very likely that it will even "break 7".
Under such expectations, there are many sellers who have the idea of "save" the money in their account. They all said they would wait until the US dollar exchange rate "breaks 7" before transferring the exchange. One of the sellers with tens of thousands of dollars said he was optimistic about the subsequent rise in the US dollar exchange rate and would wait for it if he didn't need money in a hurry.
Suppose a seller holds US$1 million and exchanges the exchange rate of RMB 6.8698 on August 29, which will be exchanged for RMB 6869,800. If it is exchanged for RMB 7 in the future, it will be exchanged for RMB 7,000,000, which will be exchanged for RMB 1.3 million.
However, some sellers believe that safety is the most important thing. For example, a seller said that he would exchange some of the exchange rate for every little increase, so he would not step on short positions. Another seller also said that he should not think about earning the last copper , and he would close if he meets expectations.
No matter what, at present, sellers who simply make American websites can be happy first. However, many sellers now operate at multiple markets at the same time. For those sellers whose businesses span the European and American markets, their mood is now painful and happy.
is different from the dollar exchange rate, and the euro is collapsing. In the European and American markets, if sellers account for a high proportion of US sites, it would not be too sad. If the business volume of the two markets is 1:1, the US dollar exchange rate and the euro exchange rate rise and fall, pain and happiness can also offset each other. The biggest one is that European sites account for the majority, or sellers who only work as European sites.
"falls" and the euro exchange rate collapses
Some companies are happy and some are sad. The strong dollar puts huge downward pressure on non-USD currencies. Now the exchange rates of currencies such as the euro, pound, yen, and Korean won are all moving downward. The euro, in particular, has fallen below par with the US dollar, falling to its lowest level in 20 years (since December 3, 2002), ending the one-to-one exchange rate with the US dollar.
August 29, as of 10:29, the euro exchange rate against the US dollar was 0.9986 and the lowest was 0.9916.
The exchange rate of a currency can be used as a judgment on the economic outlook, while the euro exchange rate has been declining at present. It can be seen that The European economy has broken away from the impact of the new crown epidemic and has recovered from the expectation of economic recession.
Euro decline is affected by multiple factors. Many analysts attributed the euro's decline to market expectations that the Fed will raise interest rates quickly to counter inflation near 40-year highs. If the Fed raises interest rates more than the ECB, higher interest rate returns will attract investors to switch from euro to dollar-denominated investments. These investors will have to sell euros and buy dollars to buy these shares. This led to the depreciation of the euro and the appreciation of the dollar. The energy crisis of
continues to ferment is also an important factor. Energy prices have pushed the eurozone inflation rate to a record 8.9% in July, data showed. As Russia reduces flow to Germany's Nord Stream 1 pipeline to 20% capacity and says it will close the pipeline for three days this week for "routine maintenance", it casts a shadow on the European economy.
The recent slowdown in European economic growth has also led to a decline in the euro against the US dollar.
Faced with the current situation of the euro's decline, foreign traders have all set their sights on its future trend.
is expected to show that the supply of natural gas continues to be severely interrupted due to the conflict in Russia and Ukraine, causing economic growth to slow down, and the euro zone will experience a moderate recession in the second half of 2022. If Russia completely cuts off natural gas supply, the euro zone may experience a more serious recession.
Last month, the European Central Bank raised interest rates for the first time in 11 years, exceeding the expected half a percentage point. It is expected to increase again in September. But if the economy falls into recession, this could prevent a series of interest rate hikes from the ECB.
Citibank CEEMEA Strategy Director said "Our outlook, trading and strategist positions are definitely biased towards further depreciation of the euro on the current basis.""
As we all know, Europe is the second largest market for Chinese cross-border e-commerce sellers. When American site sellers happily calculate how much more dollar in their accounts can transfer, some European site sellers who are under pressure of falling exchange rates and inflation caused the decline in purchase rate, threatening to sell accounts and run away.
Faced with the terrible euro exchange rate, some sellers cried and wanted to die on the spot every time they saw it. Some sellers said that the euro exchange rate has no lowest exchange rate but lower, which really can't stand it. Some sellers hold the idea of "the euro will not continue to depreciate", thinking about "let it go", and put the money on when the exchange rate is slightly better, but on the other hand, they are worried that third-party accounts are not safe.
Some sellers believe that they cannot completely rely on the exchange rate rise and are dealing with the current dilemma through other methods. For example, a seller believes that the continued decline in the euro rate is inevitable, and said that he wants to buy a set of EU local account to reduce tax payments to reduce costs and increase profits.
On Monday last year (Monday), the euro-to-renminbi exchange rate closed at 7.62, but opened today but fell to 6.84, down nearly 1 point. If you take 1 million euros as an example, the seller's profit has shrunk by 780,000 yuan this year compared with last year.
In fact, not only the euro, but also the pound and yen are in the market. Entering this crisis. The pound has also fallen below 8.10 against the RMB. Today, as of 10:35, it opened at 8.0661, with a low of 8.0487. As for the reasons for the decline, economists believe that it is also related to the unclear expectation of interest rate hikes, and the risk of the pound falling in in the next few weeks still exists.
In addition, Japan, another major market for cross-border e-commerce sellers, is the same. Not long ago, the yen fell nearly 12,000 points against the US dollar, and it has experienced four consecutive days of depreciation in a week. Today, as of 10:35, the yen exchange rate against the RMB opened at 0.0499, with a low of 0.0498.
faces a collective downward exchange rate. In order to balance profits, the most direct way is to balance profits. Price increases, however, as in-volume becomes increasingly serious, price reduction is the main theme, and price increases will directly affect the order volume. Some sellers even after raising the selling price, order volume is directly "on 0". Therefore, exchange rate fluctuations will directly affect the seller's income. The larger the size, the more obvious the seller's loss.
exchange loss is as high as tens of millions, and seller's profits are "eat up"
Anke Innovation mentioned in its 2022 semi-annual report that as of the end of the reporting period, the exchange rates of the euro and Japanese yen have continued to weaken this year. As of the end of the reporting period, the depreciation of the RMB against the euro and Japanese yen compared with the beginning of the year was 2.93% and 11.37%, respectively, which to a certain extent affected the company's revenue performance in Europe and Japan.
It is reported that in the first half of this year, Anker Innovation's revenue in the European market accounted for 18.84% of the total revenue, or 1.109 billion yuan, or 1.309 billion yuan, or 13.25% of the total revenue, or 780 million yuan. Among all regions, Europe and Japan are the second and third largest markets of Anker Innovation. Although the semi-annual report does not mention the specific amount of foreign exchange losses, the losses can also be imagined under the hundreds of millions of market size.
For cross-border sellers, exchange rate is an important factor affecting profits, especially since the epidemic, exchange rate fluctuates very frequently, and once exchange loss occurs, it will thin profits. Judging from some big-selling data, their annual foreign exchange losses are as small as millions of yuan, and the most are even as high as tens of millions of yuan. The profits are greatly "eated" by foreign exchange losses. You should know that many sellers are busy all year round and work diligently. Once the accounts are settled at the end of the year, there may not be any profits in this amount.
Zhiou Home Furnishing’s latest prospectus (paper version) released by Zhiou Home Furnishing on July 13 shows that due to the impact of exchange rate fluctuations, the company’s exchange loss confirmed in from 2019 to 2021 was 3.2253 million yuan, 4.1423 million yuan and 71.7521 million yuan, respectively, accounting for 2.26%, 0.89% and 24.03% of the total profit, respectively.
can be seen that the amount of foreign exchange losses caused to Europe in 2021 is relatively large. According to the European Union, it is mainly because the exchange rates of the euro and the US dollar against the RMB generally show a volatile downward trend. At the end of 2021, the mid-price exchange rates of the euro and the US dollar against the RMB fell by 9.86% and 2.52% respectively compared with the beginning of 2021.
With the rapid expansion of the company's overseas business scale, the company's foreign exchange sales revenue and procurement expenditure will further increase. The foreign exchange market has continued to fluctuate recently. For example, due to the recent tensions in the Russian-Ukrainian conflict, there is certain uncertainty in the short term of the euro-RMB exchange rate trend.
Compared with the situation where the RMB continues to appreciate and the euro and the US dollar depreciate in 2021, although the depreciation trend of RMB exchange rate against the US dollar in 2022 is relatively obvious, From January to March 2022, the exchange losses confirmed by the European Union were still 12.3748 million yuan.
Another big seller in the listing process, , Saiwei era has also suffered a lot of losses. On August 27, the prospectus (registered draft) released by Saiwei showed that its export business mainly uses US dollars, euros and pounds as settlement currencies, and the net foreign exchange gains and losses in the company's financial expenses in 2020 and 2021 were RMB 63.3372 million and RMB 27.4069 million respectively.
East China Big Sell Chuangyuan Co., Ltd. The exchange gains and losses incurred in 2020 and 2021 were also as high as RMB 13.668 million and RMB 9.6959 million, respectively, accounting for 20.87% and 174.61% of the total profit in the current period.
Fortunately, Chuangyuan shares’ overseas sales are mainly priced and settled in US dollars. The fluctuations in the US dollar on the exchange rate will have an impact on its revenue and exchange gains and losses. In the first half of this year, the RMB exchange rate against the US dollar depreciated by about 5%, so exchange losses have also improved greatly. It is reported that in the first half of 2022, Chuangyuan Co., Ltd.'s foreign exchange profit and loss was -20.59 million yuan, a year-on-year decrease of 934.05%, and an increase of operating profit of 23.06 million yuan.
However, the exchange rate is uncontrollable. Therefore, when talking about the exchange rate risk , it is said that if the RMB continues to appreciate against major settlement currencies such as the US dollar and the euro for a long time, or the exchange rate fluctuates significantly, and the company fails to take effective measures to deal with the exchange rate risks, it may lead to large exchange losses in the company, and the company will face the risk of operating performance fluctuations caused by exchange rate changes.
responds to exchange rate risks and sells this way
Now the US dollar has appreciated significantly against global currencies, among which the cross-border RMB settlement appreciates by more than 7.5%, the euro and pounds are both more than 12%, and the Japanese yen is more than 18%. Chinese cross-border sellers are facing the situation where the US dollar has become more valuable, while other currencies such as the euro, yen, pound and other currencies are shrinking against the RMB.
foreign exchange rate is affected by many aspects and is uncontrollable. It is difficult for sellers to predict its trend, but some measures can be formulated to deal with risks.
PayoneerPaiAnying Senior Product Director, Jason Liu, said that what sellers can do is: 1. Within the scope permitted by national policies, use foreign currency original coins to pay for business expenses incurred overseas as much as possible, and then confirm the income from the balance by foreign exchange settlement. 2. Shorten the collection cycle to reduce the impact of foreign exchange fluctuations. 3. Different currencies have different risks of fluctuations, so targeted response plans need to be chosen.
In fact, in order to reduce the impact of exchange rate fluctuations on performance, some big sellers have used many "tricks" to deal with it:
In the prospectus (registered draft) released on August 12, Taotao Automobile Industry stated that its measures to deal with exchange rate fluctuations mainly include:
① The company's overseas subsidiaries (subsidiaries) have independent pricing rights, and when pricing products, they usually consider the impact of US dollar exchange rate fluctuations. For example, when the exchange rate of the US dollar against the RMB continues to fall, the company will appropriately increase sales pricing in the United States based on inventory conditions and reduce the impact of exchange rate fluctuations on operating performance;
② The company mainly adopts spot foreign exchange settlement, chooses to settle foreign exchange when the foreign exchange market is better, and when necessary, it is necessary to carry out forward foreign exchange settlement and sales business to reduce the risk of exchange rate fluctuations;
③ The company increases US dollar loans in 2021 to reduce the risk of exchange rate fluctuations.
At the same time, Huakai Yibai also stated that the company held a board meeting on December 28, 2021 to review and pass the "Proposal on the Holding Subsidiaries' Forexchange Derivatives Trading", agreeing that the holding subsidiary Yibai Network will rely on specific business operations and, without affecting the normal turnover of daily funds and the normal development of its main business, use its own funds to conduct foreign exchange derivatives trading within the amount of RMB no more than RMB 150 million to prevent large fluctuations in exchange rates from adverse effects on the company's performance.
Anker Innovation also said that in order to reduce the impact of exchange rate fluctuations, the company will continue to carry out foreign exchange hedging business to offset the impact of exchange rate fluctuations to a certain extent. In the future, the company will continue to strengthen the analysis and research on exchange rate changes, actively manage foreign exchange risks, adhere to the principle of " risk neutral ", choose the right currency quotation, balance foreign currency receipts and expenditures, and comprehensively adopt various methods such as foreign exchange hedging to reduce the possible adverse effects of exchange rate fluctuations.
In addition, it will also actively explore the global market and continue to adhere to domestic market investment, strive to increase the proportion of domestic market share to reduce the uncertain impact of exchange rate fluctuations on the company's performance.
In general, although the exchange rate of the US dollar against the RMB, as well as the exchange rate of the euro, pound, yen, etc. against the RMB, are rising and falling, since the main target market of most cross-border e-commerce sellers is still in the United States, to a certain extent, the current exchange rate status is a good thing for sellers. For example, Zhiou stated in its latest prospectus that the depreciation trend of RMB exchange rate against the US dollar is relatively obvious. From January to March 2022, the company confirmed that exchange losses decreased by 15.5816 million yuan year-on-year. It is expected that the negative impact of exchange losses caused by exchange rate fluctuations on the company's operating performance in the first half of 2022 will be reduced.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-