Who Predicted?

USD/CNY Exchange Rate Trend 2023. Magic

  • Jan to mid-Sep rose by 6.54% from 6.88 to 7.33.
  • Oct-Dec: fell by 3.29% from 7.33 to 7.09

This is the main feature of the US dollar against the RMB market in 2023, with a total rise to a sharp fall. How many export enterprises are affected? Who can predict the exchange rate trend in 2024?

In the year 2023, the USD-CNY exchange rate experienced dramatic ups and downs, triggering concerns among import and export businesses. From January to September, the rate soared from 6.88 to 7.33, marking an increase of 6.54%. However, in the last three months of the year, the rate dropped from 7.33 to 7.09, a decrease of 3.29%. This volatile trend significantly impacted businesses and their profitability, emphasizing the importance of accurate predictions for the 2024 exchange rate trends.

In the first half of 2023, the USD-CNY market witnessed a rapid surge, rising from 6.88 to 7.2, an increase of 4.42%. However, by late June to mid-July, the market experienced a brief adjustment. The rate then climbed to its peak in September at 7.33, representing a further increase of 1.59%. But after that, the rate gradually declined, hovering around 7.25-7.27 and 7.28 in November. Suddenly, in early November, the USD-CNY rate dropped below 7.25 to 7.12, a significant decrease of 1.91%.

This sudden change caught the attention of import and export businesses. While Chinese importers benefited from this drop, exporters, especially those in low-profit industries like hardware production, faced a serious challenge. With a payment cycle of 30-40 days after goods reached the destination port, they were exposed to considerable risk. Many export contracts became unprofitable, and some even resulted in losses for businesses.

This situation heightened the awareness of exchange rate fluctuations among export businesses. Fortunately, after the sharp decline, the rate did not continue to decrease. Instead, it gradually rose back to 7.12, and even 7.13 after Christmas, representing a slight increase of 0.14%. However, on Friday of that week, December 29th, the rate suddenly dropped to 7.09, a decrease of 0.42%, creating uncertainty for businesses in the following week. Since early November, frequent rate changes have posed a significant challenge for export businesses, forcing them to raise their FOB prices and shorten the validity period of their quotes to 3-5 days. Furthermore, as the Spring Festival approached, the prices of raw materials continued to rise, further pushing up FOB prices.

Despite the impact of the rate drop and raw material price increases on export orders, there were still 4-5 shipping periods before the Spring Festival. Due to the longer holiday period for Chinese factories, the shipping schedule after the Spring Festival was set for the beginning of March. With customers rushing for their orders, many factories had to work overtime to meet the demand.

Overall, 2023 was a year of significant volatility in the USD-CNY market, squeezing the profits of export businesses and even causing losses. This serves as a valuable lesson for export businesses, highlighting the need to closely monitor the exchange rate market and adapt strategies to address challenges and opportunities.

Attentions:

Due to the impact of exchange rate fluctuations, order backlog, and rising raw material prices, the prices of products are expected to remain high until April. We kindly advise our clients to consider this when making purchasing decisions

Wrote by Alice Lv on Dec, 29, 2023.

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