RMB rose more than 8percent in half a year and remained stable at 6.5 level for 12 consecutive trading days

category:Finance
 RMB rose more than 8percent in half a year and remained stable at 6.5 level for 12 consecutive trading days


According to the data, on the evening of December 1, the US dollar index fell sharply, breaking through the previous low point, reaching 91.1409, a new low since April 2018. On the 2nd day, the trend of the US dollar index rebounded. As of 16:30 p.m., it was 91.308, up nearly 17 points from the intraday low.

At the same time, after a strong rise in the opening of the 2nd day, the rise of RMB narrowed in the afternoon. As of the closing of 16:30, the RMB was at 6.5667 against the US dollar and continued to stand at the 6.5 level, which was 8.49% higher than the years low of 7.1765.

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.

Deutsche Bank also recently released its 2021 China Economic Outlook report, believing that Chinas economic growth is expected to reach 9.5% driven by investment, consumption, exports and other factors. It is predicted that by the end of 2021, the exchange rate of RMB against US dollar will rise from the current level of nearly 6.6 to about 6.2, with an appreciation rate of about 5.8%.

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.

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.