Chinese Exporters Dump Dollar

The anecdotal evidence that China is diversifying its forex exposure
away from the Dollar continues to mount. To date, most of the focus has
centered around the Central Bank of China, which is passively
diversifying its reserves into European and higher-risk assets.
Apparently, Chinese exporters are also getting nervous about the impact
of a falling Dollar on their respective bottom lines. The RMB has risen
11% since the beginning of 2007, which means Chinese companies now
receive 11% less on sales to destinations abroad than they did for
equal-priced goods in 2007. As a result, some companies have taken to
quoting prices in Euros or to adjusting Dollar-denominated prices every
few months. Other companies are building assumptions of a more valuable
RMB into their profit models, and setting prices accordingly. The New
York Times reports:

“We are gradually increasing our emphasis on the domestic market until
we can forget about the export market, because the profit margins on
exports are so thin,” [said one exporter].

Read More: Some Chinese Exporters Prefer Euros to Dollars