"The foreign exchange reserves of emerging markets in Asia have decreased by more than $600 billion, the biggest drop on record. In addition to some central banks selling foreign reserves to intervene in the foreign exchange market, the rebound of the US dollar and the soaring interest rates in developed countries have affected the valuation of foreign reserve assets. " EricRobertsen, global chief strategist of Standard Chartered Bank, told China Business News.
With the US dollar index hitting a new high in September, more and more countries' intervention in the foreign exchange market suddenly escalated. For example, at the end of September, Japan used about $20.6 billion in foreign exchange reserves to intervene in the foreign exchange market, which was the first time since 1998 that Japan intervened in the foreign exchange market to support the yen. India's foreign exchange reserves fell by $96 billion to $538 billion this year. However, the Bank of China has no obvious intervention except for lowering the reserve ratio of foreign exchange deposits (from 8% to 6%) and raising the risk reserve ratio of forward foreign exchange sales (from 0 to 20%). Since June 5438+ 10, the decline of RMB has slowed down, and the market is expected to enter the blank window of the Fed's interest rate hike in June 5438+ 10, and the exchange rate is expected to maintain a range fluctuation pattern.
The "currency defense war" started.
Since the beginning of this year, the exchange rates of major global currencies against the US dollar have fallen sharply. By the end of September this year, according to the decline of various currencies against the US dollar, Argentine peso -30.2%, Turkish lira -28.3%, Japanese yen -20.2%, Polish zloty-18.3%, British pound-17.5%, and Korean won-16.
Although the "bottom-by-bottom movement" is welcomed by all countries, because currency depreciation will drive exports, once the devaluation is out of control, the central bank will have to intervene.
At the end of September, Japan used about $20.6 billion in foreign exchange reserves to intervene in the foreign exchange market, which was the first time since 1998 that Japan intervened in the foreign exchange market to support the yen, accounting for about 19% of the decline in Japan's foreign exchange reserves this year. Previously, the yen hit a new low in nearly 20 years, and the exchange rate against the US dollar once hit 147. The Bank of Japan is one of the few central banks that insists on buying bonds. The Czech central bank has continuously intervened in the foreign exchange market since February, and its foreign exchange reserves have fallen by 19%. India's foreign exchange reserves fell by $96 billion to $538 billion this year. According to the Bank of India, in the fiscal year starting from April, the change in asset valuation can explain 67% of the decline in foreign exchange reserves, and the rest is caused by interventions to support the local currency. Since the beginning of this year, Indian Rupee's exchange rate against the US dollar has fallen by about 9%, and hit a record low in September.
Against this background, global foreign exchange reserves are declining at the fastest rate on record, with a drop of 7.8% this year, which is the biggest drop since Bloomberg began compiling data in 2003.
StevenEnglander, global head of foreign exchange research at Standard Chartered Group of Ten, estimates that half of the decline in foreign exchange reserves is caused by valuation changes. As the exchange rate of the US dollar against other reserve currencies such as the euro and the Japanese yen soared to a 20-year high, the dollar value of these currencies also declined. However, the decreasing foreign exchange reserves also reflect the pressure of the foreign exchange market, which is forcing more and more central banks to use their own "funds" to resist the depreciation of the local currency.
"The problem faced by policy makers is whether to intervene to try to stabilize or prevent the currency from falling, which requires the risk of a sharp decline in foreign exchange reserves; Or allow the currency to depreciate to maintain sufficient foreign reserves, but increase the trend of imported inflation. " Robertson said.
The pressure of a strong dollar continues unabated.
At present, the Fed has no intention to compromise like some central banks. It is hard to say that the strong dollar cycle will end, and emerging markets may still face greater pressure. As of June 10/5: 45 Beijing time, the US dollar index once again broke through the 1 13 mark.
At the beginning of last week, the US stock market rose by 5.7% in two days, and the yield of 65,438+00-year treasury bonds fell by 24 basis points (BP). Because of the weak ISM manufacturing data in September, the JOLTS job vacancy decreased by more than 65,438+000 in August, which is evidence of economic slowdown and loose labor market. This has raised investors' hopes that the Fed may soon get rid of its hawkish stance.
However, Fed officials quickly refuted this view. Charles Evans, president of the Chicago Fed, said last Thursday that by next spring, the benchmark interest rate may be between 4.5% and 4.75%; Neil Casca of the Federal Reserve in Minneapolis says the Fed still has a long way to go to suspend interest rate hikes. Further data show that economic activity continues to be strong, highlighting the reasons for tightening policies-the ——ISM purchasing managers' index for non-manufacturing industries dropped slightly from 56.9 in August to 56.7 in September, higher than the expected 56.
UBS told reporters that last Friday's non-farm payrolls report reinforced the view that the labor market continued to strengthen (supporting the Fed to continue tightening). There are some signs of early cooling in the data: new jobs are the slowest growth rate of employment since April 20021year. However, the unemployment rate dropped from 3.7% to 3.5%, indicating that the labor market is still tense. In addition, the labor force participation rate that rose last month dropped slightly to 62.3%.
Zhao, Asia-Pacific global market strategist of Jingshun, told reporters that the Fed is expected to continue to tighten its policies, which may last until the first half of 2023. The federal funds interest rate futures show that 10 raised interest rates by 75BP in October and 25BP in February, which was 165438+. Market pricing also indicates that the Fed will raise interest rates by 25BP again in the first quarter of 2023, which is expected to reach its peak at that time.
"In the past, when foreign spillover effects (overseas economic slowdown) may have a substantial impact on US economic activities, the Fed sometimes adjusted its monetary policy. However, recent remarks by Fed officials show that they are still focused on curbing domestic inflation, and currently believe that the spillover effect is not big enough to need to adjust monetary policy. " JanHatzius, chief economist of Goldman Sachs in the United States, said that it is still expected that the Fed will raise interest rates by 75BP at 5438+0 1 in June, 50BP at February 1 and 25BP at February next year, and the final interest rate will reach 4.5%~4.75%.
The situation in Asia is still far better than 1997.
In this context, the market also has such concerns-will the aggressive interest rate hike in the United States trigger the Asian financial crisis?
Morgan Stanley believes that this is a very different cycle, which is very different from the pressure period of 1997/ 1998 or 20 13 in Asia. The difference is that before the US monetary tightening cycle, Asia did not excessively increase leverage. There are very limited signs of capital misallocation or overheating in this area. Although the macro-stability indicators have deteriorated this year, this can be attributed to the sharp rise in commodity prices earlier, but these effects are expected to reverse soon. It is worth mentioning that the trade-weighted exchange rate (NEER) in this region has been relatively stable.
In addition, currency depreciation increases the cost of repaying foreign debts. However, compared with the last cycle, the situation in Asia has improved, and most of the debts are domestic debts. Since the "tapertantrum" in 20 13, the proportion of foreign debt to GDP in this region has remained stable. Morgan Stanley said that the foreign exchange reserves in the region are sufficient to pay short-term foreign debts and meet the import demand of most countries in the region for 6~ 16 months. The challenge is that further capital outflow will exhaust foreign exchange reserves and may lead to the rise of negative feedback cycle.
If necessary, most central banks still have enough firepower to continue to intervene in the foreign exchange market. For example, the data shows that India's foreign exchange reserves are still about 49% higher than the level at the beginning of 20 17, which is enough to pay for nine months' imports. But for other countries, foreign exchange reserves are rapidly drying up. According to Bloomberg data, since the beginning of this year, Pakistan's foreign exchange reserves have fallen by 42%. At present, the foreign reserves of 654.38+04 billion US dollars are not enough to meet the import demand for three months.
Interval fluctuation of RMB
In contrast, the depreciation of the RMB this year is not large. This week, the CFETS basket currency index is 10 1.03, which is limited compared with the beginning of the year (about 102), indicating that the depreciation of RMB is mainly caused by the strengthening of the US dollar.
During the National Day, the offshore RMB rebounded sharply against the US dollar. As of June 5th, Beijing time 10, the USD/offshore RMB reported 7.038, which once exceeded 7.2677 in September. Before the holiday, the US dollar against the onshore RMB closed at 7. 1 16.
On the first day after the festival, the RMB fell slightly again against the US dollar, reaching 19:50 on June 10, with the US dollar reporting 7. 15 18 and the US dollar reporting 7. 1596 against the offshore RMB.
Since August, the depreciation of RMB has accelerated. At the beginning of September, the Bank of China announced that it would reduce the foreign exchange reserve ratio of financial institutions by 2 percentage points, so as to moderately increase the supply of US dollars and play a role in buffering the strong US dollars. On September 20th, Bank of China successfully issued RMB 5 billion 6-month central bank bills in Hongkong, China, with the winning interest rate of 2.2%. On September 28th, the central bank raised the foreign exchange risk reserve ratio of forward sale of foreign exchange from 0 to 20%, which came into effect.
The market predicts that the RMB may still face the pressure of a strong dollar in the fourth quarter, but it tends to fluctuate in the range. A foreign exchange trader of a stock bank told reporters that the RMB exchange rate will remain stable in the short term, and the expected range is 7.05~7.2. Wu, director of macro strategy of AVIC Trust, told reporters that the Federal Reserve did not raise interest rates in June 5438+ 10, and US debt and US dollar will not be the factors that "suppress" RMB and A shares.