The exchange rate of the RMB against the US dollar plunged starting from the second quarter of 2018, depreciating 8% in July from April and falling below 6.91 recently to a new low. People's Bank of China announced on August 3rd that, it will adjust forward foreign exchange risk reserve requirement ratio (RRR) to 20% starting from August 6th after adjusting the RRR to 0 in September last year, boosting the RMB exchange rate rallying on that day. How could the fluctuations of RMB affect China’s home appliance industry?
The depreciation of RMB is expected to drive home appliance industry to be further concentrated after the round of inventory reduction in 2017 resulted from RMB appreciation and the rising cost of raw materials.
The fluctuation of RMB has made immediate effects on export-oriented enterprises. The diving RMB exchange rate increases the exchange gains of enterprises and is expected to mitigate the negative influence of US-China trade frictions, but it could cause overseas clients to require a reduction of price if the trend continues.