During this round of RMB depreciation, it fell below the 7.0 mark for the first time on September 15. After that, the RMB has been running above 7.0 for more than two months.
However, in early December, the RMB finally regained the 7.0 mark strongly.
But in the past few days, the RMB has fallen below 7.0 again!
Investors can’t help but worry, will the RMB resume another round of decline?
Does the fall of the yuan mean that overseas funds are selling off Chinese assets?
01, The US economy is recovering
In the past few days, the United States has surprisingly released a strong economic data, that is, the GDP in the third quarter has grown at an annual rate of 3.2%.
Looking back at the GDP of the United States in the first two quarters, experienced negative growth compared with in the first quarter, and continued to shrink in the second quarter. Therefore, no one dares to have too optimistic estimates of the third quarter data. However,
surprised the market when it announced the initial value and actually resumed growth. The current revised final value has reached 3.2%, far exceeding market expectations.
Supported by this favorable economic data, the Federal Reserve became more hawkish.
Because Fed officials believe that the U.S. economy is still strong, U.S. employment is still very tight, and U.S. inflation is still at a high level, the Fed has reason to continue raising interest rates and maintain high interest rates for a longer period of time to ensure inflation returns to 2%.
I believe that it is this market expectation that has caused the RMB exchange rate to fall slightly, because if the Federal Reserve continues to raise interest rates, the interest rate difference between the U.S. dollar and the renminbi will be further enlarged, which may cause more funds to flow to the U.S. dollar and give up RMB assets.
02, exchange rate
We look at the weekly offshore exchange rate of the US dollar against the RMB. The RMB fell by 0.15% last week and 0.33% this week. The exchange rate was at the lowest at 7.0152, which seems to be a slight decline.
However, from the daily line , we can see that since the last big rise on December 5, the exchange rate has been fluctuating in many trading days since then. It has fallen below the 7.0 mark several times, but has quickly recovered, including this time it fell to 7.01 and then rebounded quickly, and is currently back at 6.99.
Therefore, judging from this trend, it can only mean that the RMB needs to adjust after regaining 7.0, and it cannot be said that it will fall again.
In addition, whether the U.S. dollar raises interest rates or not, it is difficult to cause the RMB to fall again .
Because the U.S. dollar raised interest rates by 75 points in November, the RMB began to rise. In December, the U.S. dollar raised interest rates by 50 points and the RMB continued to rise. Even if the Federal Reserve raises interest rates by by 725 points in February next year, or even if it raises interest rates by 50 points, it may not change the mid- to long-term rising trend of the RMB in the future.
The so-called interest rate difference between the US dollar and the RMB has actually existed for some time, and it is not ruled out that the RMB may cut interest rates in the future, further widening the interest rate difference.
But this just shows that there are huge differences in the economic environment between China and the United States. China Our biggest advantage is that we can cut interest rates to stimulate the economy.
03, flowing into China
and the market is worried that foreign capital will flee the Chinese market and sell Chinese assets, which is not actually true.
Although there was a monthly net selling of northbound funds in October, there was a clear reversal of to in November. Not only did funds continue to flow in, but the inflow amount in November was much greater than the outflow amount in October.
Although the inflow scale of northbound funds slightly decreased in December, overall it is still dominated by inflows. In the past week, only Monday saw a small net sale, reaching 1.49 billion yuan. In the following trading days, all net purchases of and were made, and the purchase amount has far exceeded the sales amount on Monday.
Judging from the statements of many top European and American investment banks, not only have they not sold Chinese assets, but they are also desperately adding positions .
Recently, a new ETF was established overseas to invest in China's platform economy by adding leverage . This further illustrates the strong confidence of overseas capital in the Chinese economy.
On the contrary, China continues to sell U.S. bonds , with the sales amount reaching more than 62 billion US dollars in the past two months.
China is working hard to enhance the international status of the RMB. In addition to selling U.S. bonds, it is also buying gold, and continues to diversify the asset structure of its foreign exchange reserves , and has achieved remarkable results.
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