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Foreign trade warning! Among the top 10 currencies with the largest decline in t

We all know this truth in foreign trade: the appreciation of the local currency against the US dollar is conducive to import and not conducive to export; The devaluation of the local currency against the US dollar is conducive to exports rather than imports.


When the local currency of the importing country suddenly depreciates sharply against the US dollar, the import cost of customers will rise. Not to mention, if a country's currency continues to depreciate sharply, it will worsen its domestic economic situation.


Therefore, the last thing foreign traders want to see is that the RMB soars, and the second is that the customer's currency keeps falling.


The following is a summary of the 10 currencies with the most serious depreciation of global currencies against the US dollar in 2021. When exporting to these countries, you must pay attention to the payment and delivery, and pay attention to the safety of foreign exchange collection.


NO.1 Turkish Lira

Turkish President Recep Tayyip Erdogan's current strategy is to transform Turkey into a manufacturing power with a cheaper lira. So when countries raised interest rates one after another, he cut interest rates and fired off central bank officials who refused to cut interest rates. Under his series of operations, the lira depreciated by 44% against the US dollar in 2021, almost halving.


Since the end of 2021, the lira has fallen by about 8.8%. In order to curb high inflation, increase foreign exchange reserves and boost the weak currency, the Turkish government has focused on the gold in the hands of the people. Turkish people also have a tradition of hoarding gold, so the Turkish government came up with such a move: from March 1, Turkish people can deliver the gold kept at home to the financial system through banks and jewelry stores.


The Turkish government estimates that the total amount of gold in people's hands is nearly 5000 tons, equivalent to about 250 billion to 350 billion US dollars. Even if it is only partially used to support foreign exchange reserves, it is considerable. But Turkish residents said: "I personally don't want to participate at present. I still want to save gold myself."


In addition, it is worth noting that Russia supplies more than half of Turkey's natural gas, and Russian tourists have always been Turkey's main source of income. Under the conflict between Russia and Ukraine, Turkey's inflation rate may rise to a 20-year high in February, and the consumer price index climbed to 52.5% for nine consecutive months, compared with 48.7% in January.


NO.2 Argentine Peso

In 2021, the country's inflation rate exceeded 50%. From January 4, 2021 to January 5, 2022, among the 10 currencies with the largest decline against the US dollar, the Argentine Peso ranked second, with a depreciation rate of 17.85%.


The Central Bank of Argentina has taken measures such as significantly adjusting short-term interest rates and strict foreign exchange management, and refinancing its debt through the International Monetary Fund, in an attempt to stabilize the foreign exchange market and curb the decline of the peso.


In terms of import control, the Argentine customs restricts the exchange application of Argentine importers and requires importers to complete the import formalities within 90 days after exchanging foreign exchange.


In addition, the Argentine Federal Tax Administration (AFIP) is strengthening the control measures of foreign trade to avoid speculation, which leads to new problems for operators and importers in official US dollar remittance.

 

NO.3  Chilean Peso

In 2021, the Chilean Peso fell by 16.88% against the US dollar. At the end of the year, the policy instability caused by the presidential election affected investor confidence, further weakened the Chilean Peso, pushed up import costs and increased the range of price rise.


In order to curb inflation and stabilize the exchange rate, the Central Bank of Chile raised interest rates several times last year. Since July 2021, the Central Bank of Chile has raised interest rates by 500 basis points, including 25 basis points and 75 basis points on July 15 and September 1 respectively, and 125 basis points on October 19 and December 15 respectively. The range of interest rate increase has gradually increased.


However, as the Federal Reserve further tightens monetary policy and the US dollar enters the appreciation channel, the currencies of emerging economies with high financial openness such as Chile may further depreciate.


NO.4  Colombian pesos

In 2021, the depreciation rate of the Colombian Peso against the US dollar was 15.90%, the import trade was seriously impacted, and the retail market was faced with the shortage of some imported goods and high prices.


In view of the continued strong dollar policy of the United States and the fact that Colombia will hold a new round of presidential election in 2022, the peso will continue to depreciate in the medium and long term.


NO.5  Thai Baht

The Thai baht was the worst performing currency in Asia in 2021, falling from 30 baht against the US dollar at the beginning of the year to 33 baht against the US dollar at the end of the year. At the same time, the RMB exchange rate against the Thai baht continued to rise and broke through the 5.0 mark, once as high as 5.3.


he devaluation of the Thai baht largely stems from the economic recession caused by COVID-19, especially the severe impact of the epidemic on Thailand's economy, which is highly dependent on the tourism industry, which has prompted the Thai baht to be forced to depreciate. As a result, the cost of imported goods in Thailand has increased significantly and the trade risk has increased.


Jiang Gai, vice chairman of the Thai Federation of industry (FTI), said that the devaluation of the Thai baht affects the higher the price or cost of imports, especially capital goods. It is necessary to import equipment used to transform the original machinery or expand the factory production line to improve production efficiency. For transactions that have placed orders before, we have to continue to import, but from now on, if the Thai baht depreciates further and the freight cost is still high, the import of capital goods such as machinery and equipment may slow down and wait to see the trend of the Thai baht.


NO.6  Korean won

The won was the second worst performing currency in Asia in 2021. Last year, with the strengthening of the US dollar and the implementation of a wide-ranging blockade by the South Korean authorities to curb the rise of infection cases, the won has been under pressure. The highest depreciation rate of the won since August last year was about 4.8%, and the exchange rate of the US dollar against the won once exceeded the important psychological threshold of 1200.


On January 14, 2022, the Bank of Korea decided to raise the benchmark interest rate from the current 1% by 0.25 percentage points to 1.25%. This is the third consecutive interest rate hike since August 2021.


NO.7  Romanian lei

At the beginning of 2021, the exchange rate of the US dollar against the Romanian Lei was 3.9 and rose to 4.3 by the end of 2021.


It is worth noting that the Romanian National Commission for small and medium-sized enterprises recently conducted a survey of nearly 2600 enterprises, of which 93.5% said that the conflict between Russia and Ukraine would lead to an economic crisis in Romania, even though most enterprises have no business relationship with Russia and Ukraine.


NO.8  Saul, Peru

At the beginning of 2021, the exchange rate of the US dollar against the Peruvian sol was 3.620. At the end of 21, it once broke through the 4.0 mark and set a record high for the whole year.


On January 6, 2022, Peru raised its benchmark interest rate to 3%, raising interest rates for the sixth consecutive month.


NO.9  Forint, Hungary

Last year, Hungary's economy was a bit chaotic. The forint was weak and prices rose. Life after "exchanging forint for Euro" was not as good as expected.


Due to the deterioration of the situation in Russia and Ukraine, Eastern European currencies have been affected. Since February 24, the euro has risen 7.5% against the forint and the US dollar has risen 13% against the forint.


NO.10 Zloty, Poland


At the beginning of 2021, the exchange rate of the US dollar against the Polish zloty was 3.7 and rose to 4.0 at the end of the year.


On January 4, 2022, the monetary policy committee of the Central Bank of Poland announced an interest rate increase, raising the main interest rate by 50 basis points to 2.25%, which is the fourth consecutive interest rate increase by the Central Bank of Poland and the first national bank to raise interest rates in 2022.


In March, affected by the situation, the Polish zloty continued to depreciate, falling to a level not seen in the past two decades against the US dollar and the euro.


According to the analysis, in 2022, the four emerging markets facing the greatest risk of currency crisis are Egypt, Romania, Turkey and Sri Lanka.

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