The continued appreciation of the Chinese yuan against the U.S. dollar is increasing the competitiveness of imported cotton -- since July 2005, the yuan has appreciated 10.48 percent against the U.S. dollar. China has indicated that it will allow the yuan to appreciate more rapidly, with daily fluctuations expected to increase from the current .5 percent to .8 - 1.0 percent. This suggests that the yuan could reach 7.1061 by mid-2008 and 6.7326 by the end of 2008.
The continued appreciation of the yuan is lowering the cost of imported cotton. On July 20, 2005, an imported cotton cost of 65 cents was at 14,406 yuan per ton in local cost; by March 20,2006, that same cotton had only cost 13,975 yuan per ton; and by December 19, 2006, it had dropped to 13,726 yuan per ton. At the current rate of appreciation, by December 19, 2007, it is expected to be worth only 13,352 yuan per ton. If the yuan appreciates to 7.1061 by mid-2008, the price will drop to 13,099 per ton. This suggests an increase in the competitiveness of imported cotton.
The continued appreciation of the yuan is lowering the cost of imported cotton. On July 20, 2005, an imported cotton cost of 65 cents was at 14,406 yuan per ton in local cost; by March 20,2006, that same cotton had only cost 13,975 yuan per ton; and by December 19, 2006, it had dropped to 13,726 yuan per ton. At the current rate of appreciation, by December 19, 2007, it is expected to be worth only 13,352 yuan per ton. If the yuan appreciates to 7.1061 by mid-2008, the price will drop to 13,099 per ton. This suggests an increase in the competitiveness of imported cotton.
