China News Service, September 8 (Chief Financial Reporter Li Jinlei) The RMB exchange rate against the US dollar is approaching the 7 yuan era. Whether the RMB will "break 7" has attracted attention.
People's Bank of China authorized the China Foreign Exchange Trading Center to announce that on September 7, 2022, the mid-price of the RMB exchange rate of the interbank foreign exchange market RMB was: 1 US dollar to RMB 6.9160, a 64 basis points lower than the previous trading day.
In addition, the onshore RMB exchange rate against the US dollar fell below the 6.97 yuan mark, and the offshore RMB against the US dollar fell below the 6.99 yuan mark, which was close to "breaking 7".
Why does the RMB exchange rate depreciate?
The decline in the RMB exchange rate has been affected by a variety of factors, which has been mainly related to the United States' increased monetary policy adjustment in recent times.
data shows that the US dollar has appreciated 14.6% this year. Against the backdrop of the appreciation of the US dollar, other reserve currencies in the SDR basket have depreciated significantly against the US dollar. From January to August, the euro depreciated 12%, the pound depreciated 14%, the yen depreciated 17%, and the RMB depreciated 8%.
Senior researcher at the China Banking Institute Wang Youxin said that due to factors such as Federal Reserve will continue to raise interest rates and the weak euro, the external US dollar index continues to rise, bringing adjustment pressure to the RMB exchange rate.
However, compared with other non-US dollar currencies, the depreciation of the RMB is the smallest. Central Bank Deputy Governor Liu Guoqiang said at a regular policy briefing of the State Council on the 5th that the depreciation of the RMB is relatively small, and in the SDR basket, it should be said that the RMB has appreciated against non-US dollar currencies in addition to depreciating against the US dollar, rather than depreciating against other currencies in the SDR basket. In the SDR currency basket, a basic situation is that the US dollar has appreciated and the RMB has appreciated, but the US dollar has appreciated a little more than the RMB. Therefore, the RMB has not depreciated in a comprehensive manner.
A basket of currency data map.
What is the impact of the depreciation of the RMB?
Generally speaking, after the RMB depreciates, studying abroad, shopping, etc. will increase costs, and imports will be under pressure, but it is a good thing for exports.
General Administration of Customs html released data on the 37th, showing that in the first eight months of this year, my country's total import and export value was 27.3 trillion yuan, an increase of 10.1% over the same period last year. Among them, exports were 15.48 trillion yuan, an increase of 14.2%; imports were 11.82 trillion yuan, an increase of 5.2%.
Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce Research Institute, told China News Service that the depreciation of 's local currency will help export companies increase their export revenue, improve their competitiveness and profitability. However, the depreciation of the RMB exchange rate is also a double-edged sword. Exporting companies increase their income by depreciating the RMB exchange rate, but if they use too many imported raw materials and parts, they may also increase their expenditure due to depreciating the RMB exchange rate.
China Minsheng Bank chief economist Wen Bin told China News Service that for China Import and Export foreign trade companies, it is necessary to manage exchange rate risk to ensure the normal production and operation of enterprises.
Is the RMB "breaking 7"?
Regarding the future trend of the RMB exchange rate, the market is generally concerned about whether it will fall below the integer mark of 7.
CICC pointed out that in the context of significantly enhanced linkage between the RMB and the US dollar, analyzing the future trend of the RMB exchange rate depends more on the US dollar index. Therefore, the RMB is under pressure to depreciate or even "break 7", but the impact of this round of depreciation on capital flows is not strong, and expectations will not be significantly weakened.
Ping An Securities Chief economist Zhong Zhengsheng believes that this round of RMB exchange rate has the possibility of "breaking 7". Compared with the US dollar position, the current RMB exchange rate is still significantly stronger. But the RMB exchange rate point itself is not the most important. Whether my country's cross-border capital flow situation is stable is the essence of the problem. After two rounds of RMB "breaking 7" in August 2019 and early 2020, the 7 point itself is not easy to cause so-called overshoot.
Liu Guoqiang, deputy governor of the People's Bank of China, believes that the long-term trend of the RMB should be clear, and the world's recognition of the RMB will continue to increase in the future, which is a long-term trend.But this should be the case in the short term. Two-way fluctuations in are a normal state. There are two-way fluctuations and there will be no " unilateral market ", but the exchange rate point is not accurate, so don't bet on a certain point. We like to hear reasonable balance and basic stability, and we also have the strength to support it. I don’t think anything will happen, and I don’t allow it to happen.
RMB and US dollar data map. Photo by Li Jinlei, China News Network reporter,
, what should I think if it is "breaking 7"?
In fact, since the exchange rate of "811" was changed to in 2015, the RMB exchange rate had "breaking 7" in 2019 and 2020.
On August 5, 2019, a relevant person in charge of the People's Bank of China responded to the RMB "breaking 7", and the exchange rate of the RMB "breaking 7". This "7" is not age, it cannot come back in the past, nor is it a dam. Once it is broken through the flood, it will plummet thousands of miles; "7" is more like the water level of the reservoir. It is higher during the water-rich period, and it will fall again when it reaches the dry period. It is normal for both rise and fall.
BOC Securities Global Chief Economist Guan Tao believes that should look at the wide fluctuations of the RMB exchange rate in a normal manner. Now, whether in the government or the market, the tolerance and adaptability of exchange rate two-way fluctuations and wide fluctuations have been greatly enhanced.
Starting from September 15, the central bank will lower the reserve ratio of foreign exchange deposits in financial institutions by two percentage points, that is, the reserve ratio of foreign exchange deposits has been lowered from the current 8% to 6%. This is the second foreign exchange "reserve reserve requirement cut" this year. Experts believe that the central bank's move sends positive signals to the market, which is conducive to stabilizing RMB exchange rate expectations and avoiding irrational overshoots. (End)
