On May 31, some media reported: "The offshore RMB and onshore RMB fell below the 7.1 mark. Among them, the US dollar/onshore RMB exchange rate reached an intraday high of 7.1149."

In fact, the RMB has continued to weaken since May. Around mid-May, the exchange rate of the RMB against the US dollar had fallen below the "7" mark.

As of the end of May, the situation had not improved, but rather it seemed to be adding insult to injury.

So what causes the continued weakening of the RMB?

In my opinion, it is mainly due to the following three factors: First, the Federal Reserve continues to raise interest rates.

In order to alleviate the real pressure of the domestic economic recession in the United States and consolidate the international currency status of the US dollar.

So far, the Federal Reserve has raised interest rates a total of 10 times, and the U.S. federal funds rate has been raised above 5% for the first time since 2006.

The tightening monetary policy of the United States has forced the RMB exchange rate to continue to fall, but it has also led to many American banks experiencing huge crises and even bankruptcy. For example, Silicon Valley Bank and Signature Bank in the United States have declared bankruptcy.

However, in the long run, it is not advisable for the United States to respond to domestic market economic problems in this way and it is unlikely to last long. The Federal Reserve's interest rate raising measures may be coming to an end.

Secondly, the domestic economic recovery is lower than expected.

At the beginning of this year, that is, in January and February, the domestic economy showed a rapid recovery momentum. The national first-quarter economic indicators were successfully completed. China is also regarded as the leader of the global economy in 2023.

However, according to the data released in May, the economic recovery rate has gradually slowed down since April, which is significantly lower than market expectations, and this phenomenon will continue.

The sluggish market economy, the downturn in the real estate industry, and the weakness of the consumer market have also led to a decrease in the value of the RMB and a decline in the exchange rate.

Finally, there is the instability of the international market.

The current international community is very unstable. The Russia-Ukraine war has been going on for more than a year, and there is no end in sight. The situation in the Middle East has become more complex and conflicts continue. Recently, even Serbia (a NATO member state) may break out at any time.

If the international community is unstable, external investment will weaken.

Everyone is waiting and watching, and no one has the courage to take action easily, which indirectly leads to a sluggish market economy. This is also a major factor affecting the RMB exchange rate that cannot be ignored.

The continued weakening of the RMB is basically affected by these three factors. In addition, in my opinion, it will only become more and more difficult in the future, because it is obvious that the fiscal support this year is weaker than last year, which shows that the government finance is not that good.

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Therefore, in the current social environment, everyone should work hard and save more money to prepare for emergencies.