In fact, this round of RMB rise can be traced back to the end of May this year. On May 29, after hitting a year low of 7.1765 against the US dollar, the RMB rebounded and began to appreciate all the way. From June to July, the appreciation rate of RMB reached 2.32%; in August, the appreciation rate of RMB was 1.8%; and since September, the appreciation rate of RMB has accelerated again. This also means that this wave of RMB appreciation has continued for half a year. Today, in the eyes of many industry insiders, RMB is entering the 6.5 era.
Chinas monetary policy implementation report for the third quarter of 2020 (hereinafter referred to as the report) recently released by the central bank also mentioned the performance of RMB. According to the report, in the third quarter, the highest middle rate of RMB against the US dollar was 6.7591 yuan, and the lowest was 7.0710 yuan. Among 66 trading days, 42 trading days appreciated and 24 trading days devalued. The maximum one-day appreciation rate was 0.59% (397 points), and the maximum one-day depreciation rate was 0.41% (277 points).
The report also said that the recent appreciation of the RMB is mainly a good reflection of Chinas economic fundamentals. China has taken the lead in controlling the epidemic situation, taking the lead in realizing the resumption of work and production and the recovery of positive economic growth. The export growth is fast, and foreign entities continue to increase their holdings of RMB assets.
There are also views that the widening interest rate gap between China and the United States has reached a historical high, which has promoted the appreciation of the RMB against the US dollar to a certain extent. Recently, affected by the default risk of domestic credit debt, the yield of Chinas long-term treasury bonds and financial bonds tends to rise. In contrast, the market generally expects that the Federal Reserve will take action to suppress the yield of long-term U.S. Treasury bonds, resulting in a drop in the yield of 10-year Treasury bonds and a significant expansion of the interest rate gap between China and the United States.
Under the background of Chinas gradual economic recovery, many institutions are optimistic about the continuous appreciation of RMB. Recently, Goldman Sachs said in a media conference call that it is very optimistic about the future RMB exchange rate. Goldman Sachs forecasts that the RMB exchange rate against the US dollar will be 6.30 in 12 months, and there is still room for appreciation from the current point.
However, Xie Yaxuan, chief Macro Analyst of China Merchants Securities, also mentioned that three factors need to be considered in studying and judging the trend of RMB exchange rate: first, the trend of the US dollar index; second, the supply and demand situation of the foreign exchange market; third, the policy direction of the central bank. In his opinion, the central banks core words on the RMB exchange rate formation mechanism are three words - marketization. As a result, marketization means greater volatility and greater flexibility of the RMB exchange rate. Xie Yaxuan said: on the one hand, marketization means that the price signal of the exchange rate is determined by the changeable supply and demand of the foreign exchange market, and a variety of international and domestic factors affecting the supply and demand of the foreign exchange market may cause fluctuations in the exchange rate; on the other hand, marketization also means believing in and relying on the price signal of exchange rate to play its regulatory role. The higher the degree of marketization, the greater the volatility, and the more able to reflect the real price of RMB. Source of this article: Guo Chenqi, editor in charge of first finance and Economics_ NBJ9931
However, Xie Yaxuan, chief Macro Analyst of China Merchants Securities, also mentioned that three factors need to be considered in studying and judging the trend of RMB exchange rate: first, the trend of the US dollar index; second, the supply and demand situation of the foreign exchange market; third, the policy direction of the central bank. In his opinion, the central banks core words on the RMB exchange rate formation mechanism are three words - marketization.