We can judge the trend of RMB exchange rate from the influencing factors of exchange rate. Recall that since the beginning of 2020, the COVID-19 epidemic has led to a significant decline in the global economy. The first outbreak in China led to a sharp depreciation of the RMB against the US dollar in the first quarter, and the dollar liquidity crisis broke out in the World Financial Mall, which made the US dollar strengthen in stages. In the second and third quarters, with the gradual control of the epidemic in China, the first step was to resume work and production, while the European and American economies continued to forgive the epidemic. China's economy recovered first, and then led the RMB to appreciate against the US dollar again.
Three factors affect the trend of RMB exchange rate.
The short-term factors affecting the exchange rate include two spreads, inflation level and world capital flow, while the long-term factors affecting the exchange rate include economic addition, monetary policy and world trade level. The long-term appreciation trend of RMB exchange rate may have started, but the short-term trend may face repetition. The logic of primary discrimination is as follows:
First, the epidemic situation in China has been well controlled, and the economic recovery has been leading in the world. Because the epidemic peak in China is at other key points in the world, the GDP growth rate of -6.8% in the first quarter has become the bottom of the economy for the whole year. However, the outbreak time in Europe and the United States is relatively lagging behind. Since the economy was restarted in May, the bottom of the economy is likely to appear in the second quarter. In addition, because China's epidemic prevention and control is useful, there is no similar phenomenon in Europe and America, so China leads the world in the pace of recovery, which supports its exchange rate.
If the manufacturing PMI data of China and the United States are used to measure the difference between the two countries' economic recovery, the official manufacturing PMI of China rose to 5 1.5% in September, while the ISMPMI of the United States dropped to 55.4%, with the previous value of 56%, reflecting the characteristics of the slowdown of the American economic recovery.
Second, currency normalization in China is much faster than that in the United States. After the outbreak of the epidemic, European and American central banks greatly increased the scale of real estate purchases, and their balance sheets expanded rapidly; Relatively speaking, under the combination of "stable currency and wide finance" in China, the current round of monetary silver supply is still based on the principle of "reasonable surplus". Recently, the Governor of the Bank of China wrote that since 2020, the monetary and banking policies of the first batch of developed countries have entered the range of close to zero interest rate and negative interest rate. The policies with great influence in the early stage have certain effects, but the marginal utility decreases and it is more difficult to withdraw. In the long run, it may also affect the debt expansion and real estate bubble, solidify the distortion of economic structure, affect the fairness of income distribution, and increase systemic risks. Relatively speaking, China's monetary policy adheres to a steady direction, stays within the normal monetary policy range, and is rarely implemented in the world's major economies.
In addition, the spread between China and the United States is also conducive to the strength of the RMB exchange rate. As of1October 9 10 and 10, the yield spread between Chinese and American treasury bonds rose to 2.3978 percentage points, and once fell to 1. 19 percentage points in February. Statistics show that there is a high negative correlation between the exchange rate of the US dollar against the offshore RMB and the spread between China and the United States.
Third, China's exports are gradually recovering, and its foreign trade surplus is also being revised. In terms of capital account, compared with the long-term failure to normalize the Federal Reserve's monetary and banking policies, China's policy influence is far less than that of western developed countries, and China's financial opening and net capital inflow are conducive to the strengthening of the RMB exchange rate.
It is worth noting that China, as a representative of emerging economies, has always regarded the RMB exchange rate as a dangerous configuration. In recent years, RMB exchange rate no longer fluctuates in the same direction as equity property, but has certain hedging characteristics, that is, like dollar property, it increases in value when shopping malls fluctuate, which is mainly related to China's relatively high economic volume and good development prospects. In addition, the share of China's exports in world trade has increased in recent years, which has enhanced the attractiveness of RMB property, and the strength of RMB exchange rate is supported by economic fundamentals.
There are two reasons for the short-term slight correction of RMB exchange rate.
Of course, in the short term, there are two factors that may cause the appreciation trend of RMB exchange rate to be suspended or even slightly reduced: First, the central bank intends to guide the appreciation trend of RMB to slow down. The People's Bank of China has decided to reduce the foreign exchange risk reserve ratio of forward sale of foreign exchange from 20% to 0 from June, 2020 10. The foreign exchange risk reserve system was established on June 20 15, 10. The core is that banks need to pay a reserve to the central bank when they sell foreign exchange to customers in the future. Its essence is to reduce the social demand for foreign exchange by increasing the transaction cost of banks selling foreign exchange in the future, and then suppress the value of RMB exchange rate to reduce expectations. Once the foreign exchange risk reserve ratio of forward foreign exchange sales business is reduced to zero, it will help reduce the transaction cost of forward foreign exchange sales of financial institutions and make the RMB exchange rate tend to fluctuate in both directions. Second, the US election brings uncertainty, and the US dollar exchange rate may benefit from the dangerous rise and rebound of shopping malls.
Therefore, from a strategic point of view, the author advocates using the Chicago Board of Trade offshore RMB futures contract (CNH) to hedge the short-term RMB exchange rate correction risk and capture the investment opportunity of RMB exchange rate appreciation for a long time. With the forex futures trading of Chicago Stock Exchange becoming more and more active, we can see that the trading volume, customer positions and positions of foreign exchange futures have reached historical records. According to the data provided by Chicago Commercial Bank, by the beginning of September, the total position of all currency and bank pairs exceeded 210 billion USD. The liquidity of offshore RMB direct trading and calendar spread trading has been significantly improved, and the capital efficiency has been improved through margin write-off and sensitive execution technology, with higher trading volume and increased positions.