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During the domestic “Eleventh†Golden Week, the global foreign exchange market rallied due to the unexpected collapse of the British pound. The offshore RMB implied by the British pound showed some depreciation pressure. It once approached the low point of 6.72, which made market participants pay more attention to The first day performance after the RMB holiday.
On October 10, the central parity of the RMB against the US dollar broke through the 6.70 mark to 6.7008, a sharp drop of 230 basis points from the previous day's median price, refreshing the new low since September 2010. Subsequently, the onshore RMB against the US dollar quickly fell below 6.70 in the morning, and finally closed at 6.7028, the lowest closing price in six years.
On the one hand, the pressure on RMB depreciation came from the expectation of the Fed’s interest rate hike and the US dollar continued to be strong; at the same time, some market participants raised the expectation of RMB depreciation in the “post-SDR eraâ€, and the future exchange rate trend is worrying. However, more industry insiders have suggested that the RMB exchange rate is performing more “following the marketâ€. "The middle price does not need to stick to a fixed price, but to maintain a certain degree of volatility." Xie Yaxuan, an analyst at China Merchants Securities Research and Development Center, told the China Business News that the central bank hopes to increase exchange rate flexibility and maintain exchange rate stability. Seeking a balance, and will unswervingly continue to promote exchange rate marketization reform.
On the afternoon of the 10th, the central bank’s website forwarded the China Money Network special commentator’s article and pointed out that as the first trading day after the “Eleventh†Golden Week, the central parity of the RMB has depreciated compared with the previous one, but with the developed economies’ currencies and other emerging economies. Compared with the currency, the depreciation is relatively small, and the RMB exchange rate index measured by CFETS is still increasing. The data shows that the annualized volatility of the CFETS RMB exchange rate index in September was 2.62%, which was further lower than that in August and lower than the annualized volatility of the central parity of the RMB against the US dollar.
"With reference to a basket of currency changes, the bilateral exchange rate of the RMB against the US dollar is normal, and will continue to float in both directions in the future," the commentator said.
Since the continuous exchange rate of 6.70 in the spot exchange rate of RMB against the US dollar on the 18th and 19th of July, the RMB exchange rate has remained at this level for nearly three months, which has made 6.70 become the investor recently. The psychological bottom line for the RMB exchange rate. On the 10th, 6.70 was penetrated, which undoubtedly brought some fluctuations to the market.
Liu Dongliang, senior analyst of China Merchants Bank's asset management department, told reporters that the RMB middle price broke through the 6.70 mark and hit a new low since the “8·11†exchange rate reform, marking the so-called 6.70 “iron bottom†that has been going on for three months has been opened. Enter a new stage.
In fact, yesterday's RMB mid-price fell below 6.70.
During the “11†holiday, the US dollar soared and the US dollar index hit a high of 97.188. At the same time, the pound fell sharply due to market concerns about the UK’s “hard Brexitâ€. The pound’s exchange rate against the US dollar once fell to a 31-year low of 1.1841. The depreciation pressure on Egypt’s Egyptian pound has also dragged down emerging market currencies.
"If the US dollar index continues to remain strong, it is expected that the central and spot exchange rates will continue to depreciate. At the end of the Fed's approach to raising interest rates at the end of the Fed, this scenario is highly probable. The RMB intermediate and spot exchange rates may gradually test 6.72. ~6.73." Liu Dongliang said.
Some people believe that the renminbi has been successfully included in the SDR currency basket. The momentum to support the stability of the renminbi exchange rate has not been enough. In addition, the continuous decline in foreign exchange reserves has also caused the renminbi exchange rate to be "impeded".
However, more analysts believe that China's economic fundamentals remain stable. Exports, retail and industrial production all rebounded in August, and the economy showed a stable and positive trend. These are the factors supporting the RMB exchange rate.
According to the special commentator of China Money Network, in the medium and long term, the fundamentals of China's current account surplus, abundant foreign exchange reserves, good financial position, and sound financial system have determined that the RMB does not have a long-term depreciation basis. On October 1, the RMB officially joined the SDR. After the currency basket, overseas entities will increase their holdings of RMB assets. The resulting long-term foreign exchange inflows will also help to further improve the supply and demand in the foreign exchange market. The exchange rate of the RMB against a basket of currencies will remain basically stable at a reasonable and balanced level.
Ding Shuang, chief economist of Standard Chartered China, told reporters that given the high valuation of the US dollar and the fact that the Fed is more patient in raising interest rates, the US dollar may not continue to strengthen, and the external factors facing the RMB will ease.
Chen DeNeng, currency strategist at UBS Wealth Management Investment Director's Office, also said that the market's expectation of RMB depreciation is still moderate and controllable.
“In recent weeks, the market’s expectation of a higher US dollar against the renminbi has risen slightly, mainly driven by the recent Fed’s interest rate hike expectations, rather than a renewed fear of a sharp decline in the renminbi trade-weighted exchange rate.†Chen Decan believes that the devaluation of the renminbi is still Small probability events, but he also stressed that under current capital control measures, in order to maintain capital outflows and maintain investor confidence, China's macroeconomic data will remain stable and will play a crucial role. UBS expects the yuan to fall to 6.8 and 7.0 in 6 and 12 months.
What is the solution to the renminbi falling below the 6.7 line?
Abstract [The first trading day after the “Eleventh†Golden Week, although the central parity of the RMB has depreciated compared with the previous one, compared with the currencies of developed economies and other emerging economies, the depreciation is relatively small] in the domestic “11. ..
[The first trading day after the “Eleventh†Golden Week, although the central parity of the RMB has depreciated compared to the previous one, it has a relatively small depreciation compared with the currencies of developed economies and other emerging economies]