For Zheng Bo, August was the tipping point.
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In anticipation of an interest-rate cut from the US Federal Reserve, Zheng – founder of Livall, a Shenzhen-based producer of smart bicycles and helmets – began converting his US dollar-denominated assets into yuan.
Up to then, exporters like Zheng had been hoarding their US dollar holdings to reap higher returns – sometimes as much as 5 per cent annually – compared to yuan deposits with typically lower yields.
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But some exporters expressed concerns over the impact a sustained appreciation of the currency would have on profits, as Chinese exports could become more costly and less competitive when weighed against goods from other countries.
“This [the appreciation of yuan] is not good for us, since the domestic economy is still in overcapacity,” Zheng said. “It will be difficult to grow export orders next year for most industries.”