The exchange rate is saved! The central bank has taken action to curb the rapid appreciation of the RMB...

Mixed feelings! The rapid appreciation of the RMB may soon ease, but as Member Day approaches, Amazon's warehouses are still facing severe overstocking.

The exchange rate issue has touched the hearts of many cross-border sellers. As the exchange rate continues to fall, the sellers' paper-thin profits are squeezed again. Just when many cross-border sellers are worried that the US dollar exchange rate will continue to fall in the near future, a piece of good news came: the central bank took action to curb the rapid appreciation of the RMB.

In response to this, many cross-border sellers said that the exchange rate has stabilized and they can finally wait before withdrawing cash.

However, as Membership Day approaches, the FBA warehouse overflow problem that has plagued cross-border sellers still exists. The editor has learned that many Amazon warehouses such as ONT8, SMF3, YYZ7, YYZ4, DTM2, and WRO5 warehouses are seriously overflowing, and some Amazon warehouses have already scheduled appointments until July. Under the crisis, some warehouses have begun to refuse to accept overlong and overweight goods (details will be described below). If the seller's goods are accidentally located in these warehouses, they must be prepared to miss Membership Day because the products cannot be put on the shelves in time.

The central bank has taken action to curb the rapid appreciation of the RMB. Cross-border sellers: The exchange rate is saved!

The editor learned from the People's Bank of China that in order to strengthen the foreign exchange liquidity management of financial institutions, the People's Bank of China has decided to increase the foreign exchange deposit reserve ratio of financial institutions by 2 percentage points from June 15, 2021, that is, the foreign exchange deposit reserve ratio will be increased from the current 5% to 7%.

This move means that the central bank has taken action to curb the rapid appreciation of the RMB, which is good for cross-border sellers.

According to CCTV Finance, Wuhan University Economics Doctor Guan Tao said that the central bank's increase in the foreign exchange deposit reserve ratio by 2 percentage points can freeze about $20 billion in foreign exchange liquidity, which will help tighten foreign exchange liquidity in the domestic market, increase domestic and foreign currency interest rates, narrow the interest rate differential between domestic and foreign currencies, curb spot and forward exchange settlements, and promote the balance of the domestic foreign exchange market. This policy adjustment sends two signals:

First, the central bank will not allow the RMB to appreciate too quickly and will take decisive action when necessary. The RMB exchange rate against the US dollar has risen significantly since the end of May last year . Further appreciation may cause the RMB value to deviate from fundamentals and may have a significant negative impact on export companies. The increase in the foreign exchange deposit reserve ratio this time shows that the central bank is committed to its words.

Second, if the central bank does not take action, it will be a heavy blow. In the past, the central bank generally adjusted the RMB deposit reserve ratio by 0.5 percentage points each time . This time, the foreign exchange deposit reserve ratio was raised by 2 percentage points, which is significantly higher than the previous adjustment range of the RMB deposit reserve ratio. The force is relatively large, demonstrating the central bank's determination to regulate. In the future, if there are obvious signs of speculation in the foreign exchange market, other macro-prudential tools will be continuously introduced.

Sheng Songcheng, former director of the Survey and Statistics Department of the People's Bank of China, also recently publicly stated that the current rapid appreciation of the RMB may have over-adjusted, which is unsustainable in the future and is not in line with the domestic and international economic and financial situation .

First, the U.S. economy is expected to rebound across the board in the second half of the year, and the U.S. dollar may strengthen accordingly ;

Secondly, the appreciation of the RMB exchange rate cannot offset the rise in commodity prices and cannot be a tool;

Again, the overshoot of the RMB exchange rate is due to short-term speculative behavior and is unsustainable.

In other words, the continued appreciation of the RMB will not last forever, and cross-border sellers can relax for the time being.

As soon as the news came out, cross-border sellers applauded and believed that the turning point had finally come, the RMB exchange rate would not appreciate significantly, the exchange rate was stable, and they could wait before withdrawing cash .

Although the appreciation of the RMB will reduce the purchasing costs of import companies and increase profits, it is not good for export sellers because the cost of export products will increase, which will affect the international market competitiveness of export companies' products. At the same time, there will also be exchange rate risks, resulting in exchange losses.

The editor learned that since the renminbi began to appreciate, a large number of cross-border sellers have been complaining.

A Weibo seller said that the first thing he does when he opens his eyes every day is to check the exchange rate to see if today is a good day to withdraw cash. Sure enough, another disappointing day came, and then he began a new period of autism .

There are also cross-border sellers who received orders when the exchange rate was more than 7 last year, and when they calculated their profits this year, they lost a lot of money. A Southeast Asian seller said that he happily received orders when the exchange rate was more than 7 last year, and this year the goods began to be shipped one after another. When the completed orders began to be settled, he felt painful when he saw the exchange rate. The unfinished orders were even more exciting. The factory prices were rising rapidly, and the customers would only say: Hurry up, I’m in a hurry ...

The above two sellers are just a microcosm of the current living conditions of the majority of cross-border sellers. In fact, the challenges facing cross-border sellers this year are not just the exchange rate issue.

Summarizing the market conditions in the first half of this year, we can find that not only has the exchange rate been falling, logistics costs have been rising, and shipping capacity has been limited. What is even more tragic is that product prices are getting lower and lower, raw materials are getting more expensive, advertising bids are getting higher and higher, and Amazon's warehouses are still on the road to collapse.

Many warehouses are seriously overwhelmed, and some warehouses refuse to accept goods

According to foreign media reports, this year's Prime Day will officially start on June 21. As soon as the news came out, cross-border sellers said that they should not be too happy too early. After all, the logistics timeliness is not very good except for air transportation and express delivery. They need to ship in advance, but Amazon has warehouse restrictions, so they cannot place orders even if they want to ship.

In addition, even if the seller's goods have been successfully shipped, these sellers still can't smile. Why? According to the feedback from the freight forwarder, Amazon warehouses are now experiencing delays in appointments , and even if the goods are in the warehouse , they cannot be put on the shelves in time .

The editor learned that the warehouses on Amazon that are currently experiencing serious warehouse overflows include: ONT8, SBD2, SBD3, LGB8, SMF3, TEB6, KRB2, RIC1, RIC3, ​​CLT2, YYZ7, YYZ4, DTM2, WRO5, DUS2, DUS4... From this, it can be seen that ONT8, WRO5, YYZ7, YYZ4 and other warehouses are frequent warehouse overflows, and it can be said that they have always been overflowing and have never been surpassed. Sellers whose goods are assigned to these warehouses seem to have no other choice but to cry.

Due to the shortage of staff in Amazon warehouses, the waiting time at many warehouses has been continuously extended, such as ONT8, LAX9, and LGB8. In addition, due to serious overcrowding at warehouses such as KRB2, RIC1, RIC3, ​​CLT2, SBD2, and SBD3, the appointment time has been extended to July.

The warehouse explosion not only prolonged the appointment time, but also caused a series of other serious impacts, such as Amazon warehouses refusing to accept goods.

According to feedback from freight forwarders, warehouses such as ONT8, LGB8, TTN2, AVP3, BDL6, and CHA2 have refused to accept overlong and overweight shipments. Not only does the average waiting time for full container delivery drivers at FTW1 warehouse is around 20 hours, but there is also a probability of rejection due to cargo size.

As Membership Day approaches, the editor recommends that cross-border sellers pay attention to the latest developments in a timely manner and think of countermeasures when facing difficulties to avoid pitfalls in the future.

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