The People's Bank of China announced unexpectedly on Tuesday the first time in nearly 3 years to raise interest rates to control inflation, curb real estate prices, asset bubbles continue to spread. The central bank said in a statement said on its website that the one-year deposit rate will rise from 2.25 percent to 2.50 percent, and the one-year lending rate will increase from 5.31 percent to 5.56 percent. This is the first time after the financial crisis, China raise interest rate, following the India, Brazil and other emerging markets.

China's "surprise" arise worldwide attention, and drove the dollar higher, and dragged commodity futures prices and stock market both down. The WTI crude oil plummeted $3.59/bbl to $79.49/bbl, Brent fell $3.27/bbl to $81.10/bbl. The dollar index rose 1.52% to 78.26, U.S. cotton futures prices fell nearly 300 points on the nearby contract, U.S. Dow Jones Indexes fell 1.48%. It is foreseeable that the it will also have significant inhibition on domestic "high fever" in cotton and cotton textile market.
　　
Although prices in domestic markets have space to continue to move up, the appearance of "High prices, No buyers" will become serious and risks of high prices will continue. In the 108th Canton Fair, some orders are seldom received. Currently, the prices of cotton yarn 32S are at 31500yuan/mt, combed cotton yarn 60S at 45000yuan/mt, combed cotton fine cloth (true selvedge) JC60S×JC60S 90×88 64" 1/1 at 8.80yuan/m,　JC80S×80S 90×88 64" 1/1 fine cloth( rough selvedge) at 9.40yuan/m, C40S×40S 133×72 63" 1/1 cotton poplin at 6.50-9.80yuan/m, JC80S×80S 165×105 67" 4/1 at 14.50yuan/m. And the higher prices of 60S×60S 90×88 65" rayon fine cloth (jet) are at 8.00yuan/m, rising by 0.20-0.40yuan/m again recently.
　　
The insiders believe that, as the interest rate increase by 0.25 percentage points is not enough to reduce the overall level of asset prices, it is expected interest rate will increase furthe before the end of the year to solve the problem of excessive liquidity, to control the purpose of investment and speculation. The textile market may face downward pressure around mid Novermber.

source:CCFGroup.com