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Currency Paper, Packaging And Printing Industries Should Play Well In Advance Jul 16, 2016

In September, the G20 Summit, October RMB after joining the SDR, the devaluation of the Renminbi will more likely, possible sharp devaluation of the Renminbi. Therefore, China's pulp and paper, packaging and printing enterprises should be in raw material procurement and strategic decisions lay ahead.

In recent days, the Yuan against the dollar reaching 6.7 mark, "back European era" and the dispute very intense circumstances, RMB exchange rate above 7 seems assured. Yuan overseas institutions are looked down upon, intelligence fear and greed on Wall Street indices show that RMB is about to enter the extreme State of fear.

Then, for paper, packaging and printing enterprise in China, the devaluation of the Renminbi will be the impact?

Paper-Enterprise: devaluation hurts

Because about half of paper industry raw material imported from abroad, the effect of devaluation of the RMB exchange rate on China's paper industry is self-evident. Devaluation of the Renminbi will be increasing the cost of imported raw materials, fuelling the current market up the sound of wrapping paper.

In the case of the devaluation of the Renminbi, China's paper industry at present there is a high rate of debt problems will be magnified, particularly those saddled with dollar debt paper company, will face a huge foreign exchange loss. According to 2015 30 listed companies in the paper industry exchange losses of up to 3.6 billion yuan, nine dragons, liwen two of them because the exchange rate respectively lost 1 billion and 400 million Yuan. Exchange losses greatly undermined the profitability of the paper, is the original paper frequently rising behind.

Devaluation expected increase will lead to outflow of domestic capital. 2015 the devaluation of the Yuan makes domestic capital outflow reached US $ 600 billion (may actually be higher than that). If the Yuan's value resulted in an outflow of capital, financing for capital-intensive paper business is very bad.