Why does global capital ignore the central banks regulation?

category:Finance
 Why does global capital ignore the central banks regulation?


According to Zhao Yaoting, global market strategist of Jingshun Asia Pacific region (except Japan), the rising sentiment of RMB exchange rate benefits from three factors: first, the market has expectations for the relaxation of Sino US relations; second, a large amount of global capital has continued to increase RMB assets; third, compared with the resurgence of the European and American epidemic, Chinas economy has taken the lead in achieving recovery, which has improved the risk aversion of RMB assets Property.

A director of the financial market department of a domestic joint-stock bank also told reporters that at present, the number of foreign trade enterprises betting on the continuous rise of the RMB exchange rate has increased again. On the one hand, their settlement amount has increased significantly. On the other hand, they have postponed the purchase intention. Some radical enterprises have postponed the date of foreign exchange purchase for 3-4 months, hoping for further increase in exchange rate. Now its time to lead them to the idea of risk neutral hedging.

Unexpectedly, the downward adjustment of the foreign exchange reserve ratio for forward sales of foreign exchange restricted the RMB exchange rate only for a week. The Wall Street hedge fund manager said with emotion. Behind this is the resurgence of the European and American epidemic in the past week, which has led to more and more global investment institutions to continue to increase their positions in RMB assets to avoid risks.

Many reporters have learned that, in view of more and more global capital pouring into RMB bonds to avoid risks, many Wall Street hedge funds expect the RMB / USD exchange rate to reach 6.45-6.5 by the end of the year. Therefore, they saw that the Central Bank of China quickly returned to the foreign exchange market and bought up RMB in a large scale after no follow-up exchange rate intervention measures were taken.

A foreign exchange trading director of a large European asset management institution pointed out to reporters that behind this, the epidemic situation led to more and more global asset management institutions to allocate Chinese assets as a separate asset category (significantly increasing the proportion of Chinas asset investment). In addition, since September, relevant Chinese departments have introduced a number of new policies on the opening up of financial markets, simplifying the operation process of overseas capital investment and eliminating him The worry that it is easy to enter and difficult to leave Chinas capital has accelerated the pace of these global asset management institutions to increase their holdings of RMB assets.

Even though the RMB exchange rate has risen by more than 2300 basis points in the past three months, many hedge funds seem to be unafraid of the fall of the exchange rate and are still betting heavily that the RMB will continue to reach a new high in the year. He pointed out that their confidence mainly comes from their optimistic expectations for the improvement of Sino US relations. Therefore, in the investment model, the factor weight of tension between China and the United States has been reduced one after another, making the programmed trading model automatically increase the long position of RMB. Recently, the RMB exchange rate has shown a rising trend, which further drives the programmed trading model to continuously add the bet on the bullish position of RMB.

Another round of US dollar buying will boost US financial markets bearish sentiment if it further increases the scale of US dollar buying. Phillip streble, market strategist at blueline futures. In contrast, the exchange rate adjustment signal brought by the central banks reduction of foreign exchange reserve ratio for forward sales business has been ignored by many Wall Street hedge funds.

With the RMB exchange rate reaching a new high in the year on October 20, many foreign trade enterprises have become unstable again.

The chief financial officer of a foreign trade enterprise disclosed to reporters that on the 20th, the companys responsible person urgently stopped the original foreign exchange purchase process, because he believed that the RMB exchange rate was expected to reach 6.5 in the short term, and then the purchase of foreign exchange could save hundreds of thousands of RMB foreign exchange purchase costs.

In addition, the person in charge of the enterprise also plans to close the three-month foreign exchange swap trading position which was purchased last month with the strike price of 6.6-6.65, and switch to the foreign exchange swap trading with the strike price around 6.5.

The person in charge of the enterprise began to chase up the rise and kill the fall again. As soon as he saw the rise of the RMB exchange rate, he hoped to take the opportunity to make more money. She pointed out.

The director of the financial market department of the joint-stock bank said that at present, many foreign trade enterprises are eager to take advantage of the continuous rise of the RMB exchange rate for arbitrage. Among them, there are additional purchases of RMB bullish swaps, and even their foreign exchange swap positions have exceeded 2-3 times of the enterprises daily foreign exchange business scale. In addition, some enterprises have adjusted the original risk neutral hedging strategy and bought an additional 3-month RMB option portfolio with the strike price of 6.4-6.5.

Behind this, these enterprises hope to make a profit through foreign exchange operations, so as to relieve the pressure on bank loan interest expenditure in disguised form.

Specifically speaking, foreign trade enterprises can exchange US dollar loans into RMB for production and operation at a fixed exchange rate, and return the interest of RMB linked to LPR to the bank on time; when the product matures, the enterprise will change the corresponding RMB into US dollar at the same exchange rate (to repay the principal of US dollar loan). The advantages of this operation are: firstly, enterprises can enjoy the benefits of lowering the financing cost due to the decrease of LPR interest rate; secondly, the price of foreign exchange settlement and sales in US dollar is consistent, and there is no need to worry about the risk of exchange rate fluctuation. Some companies think this product is good and decide not to postpone the purchase of foreign exchange, but to use this method to hedge 60% of foreign exchange exposure. However, some enterprises still feel that the income effect of this product is not big enough, and they still want to rely on their own skills to make a lot of money during the current RMB exchange rate boom. The director of the financial market department of the above-mentioned joint-stock banks said frankly. Source: Chen Hequn, editor in charge of economic report in the 21st century_ NB12679

Specifically speaking, foreign trade enterprises can exchange US dollar loans into RMB for production and operation at a fixed exchange rate, and return the interest of RMB linked to LPR to the bank on time; when the product matures, the enterprise will change the corresponding RMB into US dollar at the same exchange rate (to repay the principal of US dollar loan). The advantages of this operation are: firstly, enterprises can enjoy the benefits of lowering the financing cost due to the decrease of LPR interest rate; secondly, the price of foreign exchange settlement and sales in US dollar is consistent, and there is no need to worry about the risk of exchange rate fluctuation.