RMB up! Hi! This will affect the housing market, stock market, bond market

category:Finance
 RMB up! Hi! This will affect the housing market, stock market, bond market


Over the whole year, the RMB has appreciated by 4% against the US dollar and the CFETS RMB exchange rate index has increased by 3.1%. In other currencies, the RMB rose by more than 4% against the British pound and Canadian dollar, and the appreciation rate against other emerging currencies was greater.

The onshore, offshore and intermediate prices all hit new highs in more than two years

After the opening of trading, the onshore RMB exchange rate against the US dollar rose more than 100 points, with the highest intraday rise to 6.6400 yuan, a new high since mid July 2018.

Offshore RMB rose more rapidly against the US dollar, breaking through 6.65, 6.64 and 6.63, with the highest value of 6.6293.

From 2:45 p.m., both onshore and offshore RMB were back. As of the press release, the onshore RMB / USD ratio fell back to around 6.65, while the offshore RMB / USD fell back to around 6.64.

From the whole year, since the beginning of the year, the RMB has continued to depreciate due to the influence of the new crown epidemic, the tight liquidity of the US dollar, and Sino US relations. However, the rapid weakening of the US dollar at the end of May opened the curtain of the current round of RMB appreciation. Since August, the US dollar index has shown a downward trend, but the RMB still has a sharp appreciation. So far, the RMB has appreciated by 4% against the US dollar, and the CFETS RMB exchange rate index has increased by 3.1%. From the perspective of currency, the appreciation rate of RMB against other emerging currencies is greater than that of other emerging currencies, while the appreciation rate of RMB against US dollar, Canadian dollar and British pound is more than 4%.

Outlook of RMB exchange rate: short term fluctuation and long term appreciation trend

How long can the rise of RMB last?

For the follow-up trend of RMB, Guotai Junan macro team believes that Chinas economic fundamentals are still strong, and the economic recovery trend in the next two quarters is still good. However, due to the lack of support from the new fiscal stimulus package for the US economy, the uncertainty of economic recovery has increased. Therefore, from the perspective of economic fundamentals, the market will still have support for RMB in the next 3-6 months. From the perspective of Sino US interest rate spread, foreign exchange reserves and US election, the current RMB fundamentals are stable and good, but periodic depreciation due to the influence of expected factors, US political factors and the independent strength of the US dollar cannot be ruled out. However, the medium and long-term RMB exchange rate is expected to maintain a stable and rising trend. It is expected that the RMB exchange rate will fluctuate in the range of 6.5-6.9 in the near future, and it will rise gradually in the future. It is not excluded that the RMB exchange rate will rise to around 6.0 in the next year.

It pointed out that the loose monetary policy of the US Federal Reserve played an important role in the weakening of the US dollar index. However, since the second round of outbreak has not been significantly improved in the United States, the number of newly diagnosed cases in a single day has rebounded again since mid September, which means that the third round of US epidemic is coming. It can be predicted that these measures will inhibit the recovery speed of the US economy. Therefore, the repeated epidemic situation in the United States increases the necessity of extending the monetary and fiscal easing in the United States, so as to maintain a more favorable pattern for Chinas capital flow and RMB exchange rate.

However, China Merchants Securities also pointed out that the RMB exchange rate may fluctuate greatly in the process of appreciation. On the one hand, in order to improve the market-oriented formation mechanism of exchange rate, on the other hand, in response to the pressure from the United States, it is expected that the central bank is unlikely to restart its direct intervention in the market. At present, the rapid appreciation of RMB is not only one aspect of increasing volatility, but also means that there may be a short-term rapid depreciation stage in the future.

CITIC Securities believes that the RMB exchange rate may not be excessively strong in the long run. He pointed out that the trend of RMB is mainly influenced by the mutual forces between China and the United States, including the balance of payments perspective, the performance of us fundamentals, the medium-term weakness in the US dollar cycle, and the political disturbance brought about by the US election. The RMB trend may show an overall strong feature. In the long run, on the one hand, if the U.S. economy gradually recovers, the RMB exchange rate will still bear certain pressure. On the other hand, from the perspective of double cycle, the current account and capital account still need to maintain overall balance. If RMB is excessively strong, it may bring pressure on current account to a certain extent. Therefore, in the long run, RMB exchange rate may not be excessively strong.

Yang Weixiang, chief analyst of fixed income of Kaiyuan securities, believes that the current level of RMB exchange rate is appropriate, and there is no obvious overestimation or underestimation. The depreciation of RMB will be suspended temporarily, even slightly.

Central bank: successful economies must maintain currency stability

With the rapid appreciation of RMB against the US dollar, the counter cyclical adjustment of the central bank has also attracted the attention of the market.

On October 10, the peoples Bank of China announced that it would reduce the risk reserve ratio of forward foreign exchange sales to 0. The market believes that the central banks attitude is still to maintain the stability of the RMB value. This may be to curb the rapid appreciation of the RMB, avoid short-term capital inflows and push up asset prices.

It is worth noting that on the same day, Yi Gang, the governor of the central bank, wrote an article pointing out that throughout the world, successful economies must maintain a stable currency value, which includes not only the stability of domestic price level, but also the basic stability of exchange rate.

Yi Gang pointed out that if the exchange rate depreciates substantially, even if the domestic currency value of GDP goes up, the value of other international reserve currencies will come down. This will not only affect the countrys position in international competition, but also affect the peoples purchasing power. The drastic fluctuation of exchange rate will also affect the confidence of domestic and foreign economy, which is not conducive to the normal trade and investment activities of economic entities. Since the collapse of the Bretton Woods system in the 1970s, there have been many cases of currency crisis in the world. Some emerging economies which have become high-income countries have returned to middle-income countries due to the sharp depreciation of their currencies.

Yi Gang pointed out that in recent years, the peoples Bank of China has focused on grasping the relationship between the expansion of the financial industry, the reform of the RMB exchange rate formation mechanism and monetary policy in accordance with the changes in the domestic and foreign situations. Nowadays, whether it is enterprises import, foreign investment, or peoples travel abroad, shopping and schooling, they can deeply feel the real benefits brought by the basic stability of RMB exchange rate.

What is the impact of RMB appreciation

What is the impact of RMB appreciation on the housing market, stock market, bond market and other assets?

Li Guowang, chief economist of Shanghai mainland futures, said that under the background of the epidemic situation, peoples purchasing power decreased due to the internal depreciation of the RMB, and the external appreciation was caused by restrictions on outbound tourism and investment, which made it impossible to realize the purchasing power dividend of external appreciation. Since 1998, 22 years experience shows that real estate is a good investment for keeping and appreciating the value of RMB. Under the double impact of peoples devaluation and external promotion, even under the policy background of house is used to live, the markets optimism on the real estate market has rebounded, because real estate is one of the most attractive investment products for domestic and foreign funds to maintain and increase the value of RMB.

Stock market:

China Merchants Securities pointed out that if the appreciation rate of RMB against US dollar reaches 3% in 2020, transportation (air transportation) and steel and other industries may obtain more exchange earnings, accounting for 5.9% and 1.1% of net profit respectively; while export-oriented enterprises, such as household appliances (white electricity), communication (communication equipment), electrical equipment (motor, power supply equipment), mechanical equipment (special equipment), etc As some companies in the mining services sector have more foreign currency assets, RMB appreciation will also bring some exchange losses.

Bond market:

CITIC Securities believes that for the bond trend, the central bank has not pursued the trend appreciation of the RMB exchange rate. Therefore, from the perspective of interest rate and exchange rate, the interest rate may remain relatively neutral, and the bond market is still difficult to show trend opportunities. It is expected that the 10-year Treasury bond yield to maturity may continue to peak around 3.3% in the short term. Li Guowang said that in the process of the comprehensive registration system reform of the capital market and the internal circulation of Chinas economy to promote the recovery process, the capital will give priority to the companies that can quickly be listed at home and abroad, which can maintain the value at home and enjoy the dividend of external appreciation. The process of enterprise capitalization is the only way of transformation and upgrading. Only by capitalization and intellectualization can enterprises stand out from the eight major strategies (policy, finance, management, product, market, brand and resource) innovation and successfully transform and upgrade. Source of this article: Chen Hequn, editor in charge of securities times_ NB12679

CITIC Securities believes that for the bond trend, the central bank has not pursued the trend appreciation of the RMB exchange rate. Therefore, from the perspective of interest rate and exchange rate, the interest rate may remain relatively neutral, and the bond market is still difficult to show trend opportunities. It is expected that the 10-year Treasury bond yield to maturity may continue to peak around 3.3% in the short term.

Li Guowang said that in the process of the comprehensive registration system reform of the capital market and the internal circulation of Chinas economy to promote the recovery process, the capital will give priority to the companies that can quickly be listed at home and abroad, which can maintain the value at home and enjoy the dividend of external appreciation. The process of enterprise capitalization is the only way of transformation and upgrading. Only by capitalization and intellectualization can enterprises stand out from the eight major strategies (policy, finance, management, product, market, brand and resource) innovation and successfully transform and upgrade.