The war in Ukraine has lasted for 3 days. Such situation has deeply influenced the global economy. Almost all of the stocks fall during the 3 days and looks like stocks will constantly fall in the next days. Here is the question that what the war bring to foreign trade in macroscopic level.
First is the China-Europe freight train
Can the war influence the China-Europe freight train? Presently, it didn’t influence China-Europe freight train. There is one thing we should know that the China-Europe freight train is not a line, but a net. There are 65 train lines and they enter Europe in different directions. Among the 65 train lines, only one cross Ukraine. Besides, on Feb 24th, Guangzhou Railway Group declared that the China-Europe freight train had not been influenced so far.
Second is the exchange rate
With the war going on, the Russian and Ukrainian currency constantly devalue. On Feb.24th, rouble fell sharply. The exchange rate to USD became 1:86, while its 1:99 to Euro. In the mean time, China Yuan break through 6.3. On Feb 23th, offshore China Yuan exchange rate to USD is close to 1 : 6.3, most 6 : 3036. While onshore rate is 1 : 6.3178. On Feb.24th, the offshore and onshore rate are 6.3052 and 6.3280 respectively.
That’s because China Yuan has certain hedge property. The requirement of China Yuan increases because the war and the contraction of world economy. But It will cause problem to foreign trade. Rouble falls sharply means the import cost of clients goes very high. In another hand, China Yuan appreciate means our profit will reduce.
Third is the raw material
We know that Russia has rich resources like aluminum and nickel. The situation between Ukraine and Russia will certainly cause the price of such resources rises a lot. Companies which have to import such materials should make mental preparation in advance.
EverFlex will continue focus on Ukraine situation and analyze what it will bring to foreign trade industry. Follw us and get more information.