The RMB exchange rate fell in the early stage.
The RMB is still depreciating in the first half of this year. China has been the strongest currency in the world for the past two years. In the past two years, our products and exports have been high, and it can also support the global economy, which is why many investors choose the China market. It is understood that foreign factories have stopped working and can only purchase our products, and Southeast Asia has also begun to grab our orders. Many orders from China flowed to Southeast Asia because of the epidemic, which led to a decline in demand for RMB.
The Federal Reserve keeps raising interest rates, and the inflation rate in the United States is the highest level in a decade. In order to curb the rise of inflation, the Federal Reserve kept raising interest rates, which made the US dollar index rise, and the exchange rate of the US dollar against the RMB also rose, thus devaluing the RMB.
Although the RMB fell in the early stage, it was not unilateral. The central bank held a meeting on the self-discipline mechanism of the foreign exchange market. The meeting emphasized the importance of the stability of the foreign exchange market. Don't pin all your hopes on the unilateral rise and fall of RMB. Just after this adjustment, the RMB exchange rate "counterattacked"!
Why did the RMB suddenly "counterattack"
On the one hand, the reason is that the US dollar index continues to fall, while the RMB is in a passive state; In addition, China has made a good start in epidemic prevention and control, and achieved good results. Both import and export trade and current account of balance of payments have a surplus, which has provided strong support for RMB appreciation. At the same time, the influx of foreign funds has also played a supporting role in the RMB exchange rate, whether in securities, securities and other international payments.
On the other hand, the money market affected by the epidemic will return to the performance of economic recovery, and it is expected that the market will fluctuate this week. In the short term, the market's willingness to take risks does not have much room for improvement, and the RMB will enter a state of fluctuation; The seasonal weakness of the foreign exchange market and the US dollar at the end of the year indicates that there is still room for RMB appreciation.
What is the future trend of RMB?
There are differences in monetary policies between China and the United States, which may make the RMB fall below the 7.0 mark, but its downside is limited and within a reasonable range. We should see that on the basis of marketization, the RMB exchange rate is unmeasurable, but the two-way fluctuation is normal, and there is no possibility of "unilateral market".
The attractiveness of RMB assets has declined. Under the background of domestic economic recovery, China's foreign exchange market is still in a stable state. Recently, the data released by China Foreign Exchange Trading Center showed that the scale of overseas asset allocation (i.e. foreign debt) of banks on behalf of customers increased by 53% compared with last month, reaching a new high since June 20 18. With the improvement of China's economy and the acceleration of financial market opening, the inflow of overseas funds will continue to increase; At the same time, the recent weakening of RMB exchange rate is also beneficial to the long-term development of China bond market. In addition, the scale of foreign holdings of China bonds has maintained steady growth, and the proportion of foreign holdings has been increasing.
Since 2022, the market has been considering raising interest rates. If we raise interest rates (together with shrinking the table), it will inevitably have an impact on the US economy and the US dollar. Of course, as a safe-haven currency, the dollar will gradually push up because its geopolitics is changing. Therefore, although the RMB plummeted in the early stage, the downward trend has arrived and market expectations have changed. Judging from the fluctuation, the RMB will hover around 6.78 in the future, and fluctuate up and down on this basis.
Conclusion:
In short, due to various factors, the RMB will not have too much appreciation pressure and will not depreciate too fast. In the next step, the central bank will continue to build a multi-level foreign exchange market in accordance with the deployment. Take a number of measures to stabilize expectations, resolutely curb large fluctuations in the exchange rate, and keep the RMB exchange rate at a reasonable and balanced level. The RMB exchange rate formation mechanism adapts to the actual situation in China. Can give full play to the role of the market and the government. Under the impact of many international financial crises, it has accumulated a lot of coping experience, effectively controlled market expectations and provided a strong guarantee for the stability of the RMB exchange rate.