On August 5, the offshore and onshore RMB broke 7% against the US dollar. As of 11:30, the offshore RMB was at 7.10570, while the onshore RMB was at 7.04240, closing down 1.33%, the biggest one-day decline since the exchange rate reform on August 11, 2015, and the lowest in more than 11 years.

7 has always been regarded as an important psychological barrier between RMB and US dollar. It has been tried several times before, but it has not been broken in the end. Why did it break this time? Yi Gang, the governor of the Central Bank, explained that "in recent years, there have been some new situations in the international economic situation and trade frictions, and market expectations have changed accordingly. As a result, many currencies have depreciated against the US dollar since August, and the exchange rate of RMB has also been affected to a certain extent. This fluctuation is driven and determined by the market.

_The RMB exchange rate breaks through "7", which has more impact on the fertilizer market than import and export. China is the world's largest exporter of chemical fertilizers and a major importer of chemical fertilizers. The annual export volume of chemical fertilizers is basically over 20 million tons, and the import volume is about 10 million tons. The main export varieties are ammonium sulfate, monoammonium phosphate, diammonium phosphate, urea and so on. The main import varieties are potassium chloride, nitrogen, phosphorus and potassium ternary compound fertilizer, etc. The change of RMB exchange rate will have a certain impact on the import and export of chemical fertilizers.

On the whole, the devaluation of RMB is beneficial to the export of chemical fertilizer. Take urea export price of US$280 per ton as an example. In the past, the exchange rate was 6.85, converted into RMB equivalent to 1918 yuan; now the depreciation is 7.05, converted into RMB equivalent to 1974 yuan. It is also US$280 per ton of exports. Now it can increase the earnings of 1974-1918 = 56 yuan more than in the past. In fact, this is equivalent to a reduction of 56 yuan per ton of the cost of enterprise exports, low cost, more competitive in the international market, more conducive to exports.

_But it is bad for fertilizer import, because it will increase the cost of import. Take potassium chloride as an example. Last year's big contract was 290 US dollars/ton. If this year's big contract was 290 US dollars/ton, the import cost would be 290 US dollars/ton*6.85=1986.5 RMB at the exchange rate of 6.85. When the exchange rate became 7.05, the import cost would be 290 US dollars/ton*7.05=2044.5 RMB, and the cost would be increased by 2044.5-1986.5=58. Yuan.

_The overall situation of chemical fertilizer import and export in China is that the export volume is larger than the import volume, and the export volume is about twice the import volume. Therefore, breaking the "7" RMB exchange rate against the US dollar is better than bad for the fertilizer market as a whole.