Factors showing an upward trend:

1. First of all, affected by the Federal Reserve's interest rate hike and the stabilization of the US economy, the US dollar index continued to strengthen, putting pressure on non-US currencies and depreciation pressure on the RMB exchange rate. In fact, other non-American currencies fell faster than RMB because the US dollar index rose too fast.

2. Furthermore, the domestic economy did not go out of the V-shaped reversal trend as expected, but took the L-shaped trend, which caused people to worry about the economic prospects of China. In particular, the financial data released in June 5438+ 10, whether it is the number of new loans, the total amount of social financing, the growth rate of M 1 and M2, are far less than expected. In addition, real estate has begun to cool down, and the downward pressure on the RMB is relatively high.

3. Finally, monetary policy continues to be loose. The Bank of China has reduced the deposit reserve ratio four times in a row. Now financial institutions are not short of money, and a lot of liquidity is swirling in the financial system. The money market interest rate dropped again and again, and the rate of return on goods also dropped to 2.5%. This has led to the proliferation of RMB in the financial system, and the pressure of RMB exchange rate is inevitable.

4. In the future, the exchange rate of the US dollar against the RMB will rise, but it is impossible for the RMB to fall sharply, because once the RMB exchange rate falls irrationally, the Bank of China will use exchange rate management tools to regulate it. The central bank's current intention is to "protect the economy and stabilize housing prices" and allow the RMB to depreciate moderately and slightly. However, if there is a sharp depreciation and it becomes a trend decline, the central bank will definitely intervene. Because the trend of RMB plunging will lead to more capital outflows, thus endangering China's economic and financial security.

Analysis of dollar trend:

To judge the trend of the US dollar index in 2023, we must first analyze the inflation rate in the United States and the trend of the Fed's interest rate hike and contraction. Considering the recent evolution of commodity inflation into service inflation in the United States, the wage increase is still strong. Although the monthly CPI growth rate in the United States reached a high of 9.0% in June 2022, it will not fall back soon. It is estimated that it will remain at 4-5% or even higher in the first half of 2023. This means that the Fed's current interest rate hike cycle may last until the first half of 2023. In the future, the Federal Reserve will raise interest rates 3-4 times, and the cumulative interest rate increase space is still 100 to 125 basis points.