The US dollar breaks 7! Amazon sellers' profits plummeted by 20%, and everyone was furious!

Recently, the U.S. dollar has officially broken through 7. The U.S. dollar exchange rate is directly positively correlated with the profits of cross-border e-commerce export sellers, so it has always attracted much attention from sellers.

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The US dollar fell as the Federal Reserve cut interest rates

In the early morning of September 19, the Federal Reserve announced a 50 basis point interest rate cut. On the same day, the RMB appreciated significantly, with the offshore RMB appreciating as high as 7.0604 against the U.S. dollar, a significant increase of more than 300 points from the previous day's closing price of 7.0952.

On September 20, the RMB exchange rate against the U.S. dollar continued to appreciate, with the spot exchange rate opening at 7.0600 and then breaking through this mark to 7.0527, an appreciation of more than 100 points from the previous trading day.

The cross-border industry is wailing. The exchange rate has dropped, which is equivalent to doing nothing. Compared with the 7.6 era, profits have dropped by more than 20%. This year, if nothing is done, profits are falling!!!

Under the circumstance that the exchange rate continues to fall, those sellers with strong financial strength can indeed hoard US dollars and wait until the exchange rate rises before exchanging them. However, for most cross-border e-commerce sellers, this is not the case.

Since stocking up and paying for shipping costs require a lot of money, most cross-border e-commerce sellers often have a cash flow shortage and it is difficult to hoard US dollars in their accounts for a long time. Therefore, it is wise for them to exchange currency when the exchange rate is at a high point. Once they miss it, they will have to bear a loss.

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How can sellers reduce exchange losses?

Some sellers had worried that the US dollar exchange rate would return to the "6" era earlier. Under the influence of this rate cut, this speed is likely to accelerate. According to relevant news, the Federal Reserve may further cut interest rates by 50 basis points from the current level within this year.

If this is the case, the exchange losses of cross-border e-commerce sellers will be further increased. However, many sellers do not think they need to pay too much attention to the plummeting US dollar exchange rate.

First of all, the rise and fall of exchange rates are mainly affected by many factors such as market supply and demand, domestic and foreign economic conditions, policy factors, etc. It is not controlled by the seller, let alone by personal will.

"If you have time to pay attention to the exchange rate, you might as well study how to increase the order volume , " a seller said bluntly.

“ Maybe the income difference caused by daily exchange rate changes is not as much as today’s advertising losses.” The seller joked.

" Advertising fees, internal competition among peers, platform policies, and even fluctuations in shipping prices, these factors have a much greater impact on sellers than exchange rate changes. If the U.S. dollar exchange rate rises, just think of it as a gift from God, and don't worry too much about it if it falls." Many sellers said.

Compared with cross-border e-commerce sellers, the depreciation of the US dollar exchange rate has a greater impact on traditional export-oriented trading companies.

For example, a company signed an order worth 1 million US dollars three months ago, and reached a deal with the customer at an exchange rate of 7.25. 90 days later, when the customer received the goods and paid, the US dollar had depreciated to 7.0. The amount of RMB received by the company after the exchange was lower than the amount of the account when the order was signed, which was equivalent to a loss of 250,000 RMB.

How to reduce exchange losses when exchange rates fluctuate ? Here is a summary:

1. Choose a bank account instead of a payment institution account: Choose an overseas bank account with a corresponding license so that funds can be retained and transferred legally and compliantly, and you can choose the appropriate time to settle the exchange.

2. Deposit in original currency: To avoid exchange losses during currency conversion, choose services that support withdrawals in original currency to domestic accounts, which can reduce losses when exchange rates fluctuate drastically.

3. Establish an exchange rate risk management system : For larger enterprises, a special risk management system should be formulated, authorization procedures and authorization limits should be clarified, and norms for risk management business should be established.

4. Use financial instruments to manage exchange rate risk: hedge exchange rate risk through financial instruments such as foreign exchange forward contracts and options to lock in costs and benefits.

5. Diversified settlement currencies : Use multiple currencies for settlement to diversify exchange rate risks.

6. Improve product price elasticity: adjust product prices according to exchange rate changes to improve price elasticity .

7. Leverage financial technology: Use artificial intelligence and big data analysis to predict exchange rate fluctuations and provide support for decision-making.