RMB/USD exchange rate breaks 7.9 mark

SteelOrbis Shanghai The RMB/USD average rate on September 28 is 7.8998, breaking a new record since the exchange rate reform of 21 July, 2005. This means that the cumulative RMB appreciation range has now exceeded 2.66% since the reform took effect. Over the last 8 days, the average RMB/USD rate successively broke four important barriers, namely - 7.94, 7.93, 7.92, and 7.91. Today's breakthrough of the 7.9 mark is another sign that the RMB exchange rate is appreciating at an accelerating rate. Market players say that the constant high level of the Chinese trade surplus, which broke its monthly records in August, is a major factor in boosting the RMB exchange rate. Meanwhile, US Senators Charles Schumer and Lindsey Graham have called for the introduction of a bill entailing a 180-day negotiation period between the US and China for the revaluation of China's currency,. Otherwise, they say they will call for a 27.5% tariffs on all Chinese exports to the US. Evidently, the rapid RMB appreciation is closely linked to this issue. In the current situation, RMB appreciation does not have much impact on Chinese steel exports. On the one hand, there is still a big gap between Chinese steel prices and those in the international market, and this cannot be offset by the current appreciation. On the other hand, with the gain in strength of the Chinese currency, the prices of imported raw materials in RMB will decline and inevitably lead to a decrease in steel production costs.