The US dollar exchange rate is approaching 6.4, sellers: reluctantly withdraw cash for the New Year!

As the New Year approaches, sellers have various bills to settle, and they also need to prepare for the holiday expenses if they want to have a good New Year. But the embarrassing thing is that cross-border people who usually have orders flying around and revenues of tens of millions or even hundreds of millions may not be able to easily come up with this money because the money is all in inventory. So some people choose to withdraw their account funds for the New Year, but the current exchange rate makes people cry out in pain.

The US dollar exchange rate is approaching 6.4, and sellers reluctantly withdraw cash for the New Year

Since May last year , the exchange rate of the US dollar against the RMB has been falling. On January 29, the exchange rate of the US dollar fell again, with the lowest price at 6.4236 and finally closing at 6.4283, which made many cross-border people sweat.

On Monday this week, the US dollar exchange rate opened at 6.4308 and then rebounded to 6.46. However, this exchange rate level is not friendly to foreign traders and cross-border e-commerce retail sellers who quote and price in US dollars, and this situation may continue for some time.

On February 4, the onshore RMB exchange rate against the US dollar fell below the 6.46 mark after opening, returning to the 6.45 range; at the same time, the offshore RMB exchange rate against the US dollar fluctuated and fell. As of 9:33, the onshore and offshore RMB exchange rates against the US dollar were 6.4615 and 6.4620 respectively. The RMB exchange rate against the US dollar was 6.4605 yuan. Relevant people believe that the probability of the RMB exchange rate against the US dollar falling below 7 this year is very small, and it is more likely to fluctuate around the range of 6.2 to 6.6, with the central level around 6.4.

At the end of May last year , the US dollar exchange rate once reached 7.17, and then the US dollar continued to fall. Compared with the lowest exchange rate in recent days, sellers will suffer more than 70,000 yuan in exchange losses for every 100,000 US dollars they exchange. Sellers feel heartbroken: "300,000 US dollars in December, 150,000 yuan evaporated in an instant." "If it falls further, foreign trade will not be able to continue!" A seller said bluntly: The recent exchange rate is making me bleed every day. So many bills to pay, and they have to pay them.

There are many sellers like this. Another seller also said that he just withdrew cash today because he had to pay this month's bills and couldn't hold on any longer.

Small sales do not see profit, large sales reduce exchange losses

Some sellers joked that the exchange rate dropped from 6.5 to 6.3 in a flash, and they could withdraw cash immediately after the money arrived. However, the exchange rate has continued to fall over the past year, making it more difficult for small sellers to operate.

One Amazon seller was very distressed. He had monthly sales of 60,000, but still could not see any money coming out. The account had funds pressed, the FBA had to hold inventory, and the domestic inventory had to be kept, but he just couldn't get any money. Another seller had monthly sales of 10,000 US dollars, and all he had left was inventory, which just covered his expenses. Experienced sellers said that sales of 10,000 US dollars were too little, and it was normal to have no profit. Generally, it would take 25,000 US dollars to have a surplus.

Many small and independent sellers cannot see profits, and they have to develop new products, but they don’t know how long it will take to see output. The advice given by experienced sellers is: don’t develop too many products in the early stage, keep accounts, calculate profits, and predict the time of positive profits. However, since last year, the continuously shrinking US dollar exchange rate is making small sellers’ profits even thinner.

Small sellers are in trouble, and large sellers are also affected by the exchange rate.

Recently, Cross-Border Communication disclosed in its 2020 annual performance forecast that its non-GAAP net profit in 2020 was a loss of 160 million to 210 million yuan, due to rising operating costs caused by the appreciation of the RMB exchange rate. Leckey also stated that the rapid appreciation of the RMB exchange rate in the second half of 2020, especially since the fourth quarter, had an adverse impact on the company's profits.

In order to control exchange losses, big sellers have taken measures. Recently, Anker Innovations passed a proposal that the company and its holding subsidiaries will increase the exchange rate hedging quota for 2021 and carry out foreign exchange hedging business with a balance of no more than RMB 3 billion (or equivalent foreign currency).

Biden will give everyone another $1,400. The US money distribution has both advantages and disadvantages for sellers

Recently , a 10-member Republican group in the United States announced their $618 billion stimulus proposal. The plan will provide $1,000 checks to Americans who meet the income standards , instead of the $1,400 proposed by Biden . In addition, the plan also lowered the income limit, which means that fewer people will receive the money.

Meanwhile, House Democrats also plan to move forward with their own stimulus package.

According to US media reports, given the huge differences in stimulus amounts between the two sides, the Democrats are preparing to launch the "budget reconciliation process" to unilaterally complete the new stimulus bill without Republican support. Republicans strongly protested against this .

On February 3, US President Biden once again promised to send $1,400 checks to a large number of American adults to stimulate the US economy hit by the new coronavirus. However, Republicans disagreed and preferred the $618 billion plan.

Biden did not accept the scaled-down $618 billion plan proposed by the Republicans , but he agreed to the Republicans' proposal to lower the income limit.

Biden said he was willing to lower the income limit for recipients of the $1,400 subsidy, but would not reduce the amount of the subsidy.

This stimulus plan, combined with the $600 relief funds previously approved by Trump, allows Biden to fulfill his campaign promise: to give $2,000 to each person .

Whether giving every American $1,000 or $1,400, it means that the United States may have to print money crazily again.

Printing money and distributing it can not only reassure the people and make more voters like him, but also stimulate a big rise in the stock market. When capital goes up, the financiers will naturally be happy, and Biden will face fewer problems and his road will be smoother.

In the short term, the United States is printing money and the Federal Reserve is flooding the market with money. This wave of operations will be beneficial to cross-border sellers. American people will have money, which will stimulate shopping. Especially under the epidemic, online sales will usher in an explosion, and the corresponding sellers' orders will also increase.

But in the long run, sellers need to pay attention to the fact that behind the crazy money printing in the United States, the US dollar exchange rate may continue to fall, because unlimited money printing has caused the overall depreciation of the US dollar against other currencies, so cross-border sellers have to find ways to follow up.

In addition, the decline in GDP in Europe and the United States will also have a certain impact on cross-border sellers.

GDP in Europe and the United States fell in the fourth quarter

According to data released by the U.S. Department of Commerce, the initial estimate of the annualized quarterly rate of U.S. real GDP in the fourth quarter of 2020 was 4%, lower than the market expectation of 4.2%.

In 2020, the U.S. GDP growth rate was -3.5%, the first negative value since 2009 and the lowest since 1946.

According to Sina Finance, the eurozone's initial GDP annual rate in the fourth quarter was -5.1%, down from -4.3% in the third quarter, and still on the brink of a double-bottom recession.

Among them, France suffered a severe economic recession throughout the year. In the fourth quarter of 2020, its GDP fell by 1.3% month-on-month, which was slightly better than expected, but far lower than the previous value. The economy shrank by 8.3% in 2020, the most severe economic recession since World War II, of which the 7.1% decline in household consumption was one of the most core drag factors.

The decline in the eurozone's GDP is mainly affected by the secondary epidemic and the re-lockdown . At present, the secondary epidemic is still serious. The cumulative number of confirmed cases in Europe has reached more than 30 million, and the cumulative number of deaths has reached more than 720,000. It is one of the most severely affected regions in the world. The mutant strain continues to impact the economy, which means that the possibility of a double-bottom recession in the eurozone economy is very high. Therefore, the eurozone's GDP in the first quarter will still be weak, and there will be a trend of a second bottoming out.

When the European and American economies are hit, it is not good news for cross-border sellers who mainly serve the European and American markets.

US dollar exchange rate, seller, send money