Chinese suppliers are either increasing their prices (US Dollars) or change to other currencies (EURO).


Our supplier gives us a new price list of an increase in the price. The Chinese Policy is to trade in Foreign Currencies, and they had to claim tax rebates from the Government if the export is good, or pay tax to the Government for selling higher prices.


The Chinese Yuan is getting higher each week against the US Dollar. But it is a matter of perspective, it is the US Dollar weakening. However China is fighting inflation, the Consumer Price Index is rising, but their wages are not. It is the inflation that eats up the future value of money, not the exchange rates, our Government allows the Singapore dollar to float higher in order to address the inflation issue. We are very dependent on imports of the basic needs, and these will be less costly if the currency gets higher compared to the exporting country. So, this is one method to control inflation, which is also related to the exchange rate, it all goes around in a vicious cycle.


Another way is to cool down the economic growth, which is overheating, with lesser domestic projects, and less spendings on things nice-to-have. The fastest way is to switch currency terms of payment. Switch to Euro instead of the US Dollar, but by doing that you face the possibility of losing some customers.


Street Smart