Ma Jun: There are five differences between breaking 7 and 8.11 exchange rate reform of RMB.

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 Ma Jun: There are five differences between breaking 7 and 8.11 exchange rate reform of RMB.


First, before the 8.11 exchange rate reform, the RMB appreciated sharply with the US dollar, but not this year. From 2011 to 2015, the dollar index appreciated by 26%, and the nominal effective exchange rate of RMB estimated by the Bank for International Settlements also appreciated by 30%. Continuous large appreciation of the RMB has accumulated considerable depreciation pressure, which is more likely to lead to continuous depreciation and capital outflow. Since this year, the US dollar index has fluctuated around 97, and the effective exchange rate index of RMB has remained around 116, which has not accumulated too much depreciation pressure.

Secondly, in recent years, RMB exchange rate flexibility has increased significantly, market participantsability to adapt to exchange rate fluctuations has also increased significantly, and their behavior is more rational. Before the 8.11 exchange rate reform, the long-term unilateral appreciation of the RMB, micro-market participants have no experience in dealing with the devaluation of the RMB, a larger devaluation on a certain day will easily lead to panic. In recent years, the exchange rate elasticity of RMB against US dollar has increased significantly, and the exchange rate volatility of RMB has approached that of major developed countries. Most enterprises and financial institutions have become accustomed to the two-way fluctuation of RMB exchange rate, and foreign exchange risk hedging is more adequate. Even if the short-term fluctuation of RMB exchange rate increases, it will not generally lead to panic.

Third, by 2015, capital inflows were generally large, and once exchange rate expectations changed, outflows would be more obvious. During the period of RMB appreciation, some enterprises have strong expectations of RMB appreciation, some funds flow into China bypassing capital flow management measures, and some domestic enterprises borrow more foreign debts. These funds are very sensitive to exchange rate expectations. In 2015, Chinas total foreign debt position decreased by $322.7 billion. These conditions have changed significantly in the past three years.

Fourthly, compared with 2015, the asset allocation of Chinese enterprises and residents is more balanced, and the demand for further adjustment is relatively limited. At the end of 2014, Chinese enterprises and residents held overseas assets totalling $2.5 trillion, overseas liabilities totaling $4.8 trillion and net liabilities totaling $2.3 trillion. At the end of 2018, Chinese enterprises and residents held overseas assets increasing to $420 billion, an increase of $16 trillion, total overseas liabilities totaling $520 billion and net liabilities of $10,000. US$100 million, down by 1.3 trillion US dollars. After these years, enterprises and residents have taken the initiative to adjust the structure of assets and liabilities and increase the proportion of foreign currency assets, the impact of exchange rate changes on the balance sheets of enterprises and residents will be smaller, and it is not easy to lead to large-scale changes in asset allocation.

(function () {(window. slotbydup = window. slotbydup | []). push ({id:6374560, container:ssp_6374560, size:300,250, display:inlay-fix, async: true});} (); fifth,8.11before the exchange rate reform, the stock market experienced violent fluctuations, but this year the stock market has been relatively stable. Before the 8.11 exchange rate reform, the Shanghai Composite Index fell from 5166 on June 12 to 3928 on August 10, a decline of 24%. The pressure of exchange rate depreciation during the period of exchange rate reform reflects to a certain extent the overlapping of the risks of stock market and foreign exchange market, and the widespread existence of leverage, which makes the two markets form a shock amplification mechanism. Compared with 2015, the performance of the stock market is relatively stable this year, which has not been the cause of the devaluation of the exchange rate. Based on the above reasons, Ma Jun said, In recent years, Chinas foreign exchange market supply and demand are more balanced, residentsasset allocation is more diversified, exchange rate flexibility has been significantly improved, and the pressure of one-way devaluation and appreciation is not great. Compared with three years ago, the RMB exchange rate is more stable at a reasonable and balanced level. (Originally titled Ma Jun: There are five differences betweenbreaking 7and8.11exchange rate reform to maintain basic stability and more vitality.) Source of this article: Peng Mei News Responsible Editor: Dai Lili_NN4994

Fifth, before the 8.11 reform, the stock market experienced violent fluctuations, and this year the stock market has been relatively stable. Before the 8.11 exchange rate reform, the Shanghai Composite Index fell from 5166 on June 12 to 3928 on August 10, a decline of 24%. The pressure of exchange rate depreciation during the period of exchange rate reform reflects to a certain extent the overlapping of the risks of stock market and foreign exchange market, and the widespread existence of leverage, which makes the two markets form a shock amplification mechanism. Compared with 2015, the performance of the stock market is relatively stable this year, which has not been the cause of the devaluation of the exchange rate.

Based on the above reasons, Ma Jun said, In recent years, Chinas foreign exchange market supply and demand are more balanced, residentsasset allocation is more diversified, exchange rate flexibility has been significantly improved, and the pressure of one-way devaluation and appreciation is not great. Compared with three years ago, the RMB exchange rate is more stable at a reasonable and balanced level. (Originally titled Ma Jun: There are five differences between the exchange rate of Renminbibreaking 7and the exchange rate reform of8.11. Maintaining a basically stable base is more sufficient)