Falling dollar being felt throughout Asia
The falling dollar is putting pressure on all of Asia’s export-centric economies — even the powerhouse behind it all, China.
A story in the China Daily Friday chronicled how thin the ice is upon which textile and apparel exporters skate.
“We keep an average profit margin at about 3 percent from exporting garments,” Zhang Yang, a managing director of a knitwear exporter in eastern China’s Zhejiang Province told the newspaper. “We would struggle through it if the yuan remains to stand so high.”
A 1 percent appreciation in China’s currency results in a loss of 2 percent in profit margin in the labor-intensive textile industry, the newspaper said, citing statistics from the Guotai Junan Securities Research Institute.
“The yuan has appreciated more than 13 percent since it was de-pegged from the U.S. dollar in July 2005,” the story said. “It climbed 6.9 percent against the greenback in 2007 and has already appreciated more than 2 percent so far this year.”
It’s a similar situation throughout Asia, with Thai and Indian currencies also rising steeply against the dollar and putting the pressure on low-margin exporters. Only Vietnam, which continues to peg its currency to the dollar, has been immune.
Falling dollar being felt throughout Asia
