Previously, RMB exchange rate had risen sharply for one day. On September 29, the onshore RMB closed at 7.2000 at 16:30 against the US dollar, up 458 points from the closing price of 7.2458 on the previous trading day, and closed at 7.1210 yuan on the nightly day, up 810 basis points from the closing price of 7.2020 on the previous day.
2 on September 29 and September 30, calculated based on the day closing price, the onshore RMB exchange rate against the US dollar rose by 1,527 basis points, an increase of 2.15%.
This week, the RMB exchange rate fell for three consecutive days, and the offshore exchange rate fell below 7.26
The RMB exchange rate against the US dollar began to decline all the way from August 15. After mid-September, the three major RMB exchange rate quotes, the offshore RMB against the US dollar, the onshore RMB against the US dollar, and the RMB against the US dollar, and the RMB against the US dollar, successively depreciated below the 7.0 mark.
Judging from the trend chart, the RMB exchange rate this week is ups and downs, like a roller coaster ride. In the first three days of this week, that is, from September 26 to September 28, as the dollar index strengthened, the RMB exchange rate continued its previous decline and depreciated for three consecutive days. On September 28, the RMB mid-price against the US dollar was 7.1107, a 385 basis point lower than the previous trading day, hitting a new low since June 2, 2020. At 16:30 on that day, the onshore RMB exchange rate against the US dollar closed at 7.2458, down 878 basis points from the previous trading day, and fell below the 7.2 mark for the first time since February 2008; the offshore RMB exchange rate against the US dollar was 7.2576 at the time, falling below the 7.26 mark during the day, falling more than 800 basis points.
In the past three days, the competent departments have made intensive statements to stabilize exchange rate expectations
Since then, the People's Bank of China, the Foreign Exchange Administration and other competent departments have made intensive statements through various means, distributing "peace of mind" to the market to stabilize exchange rate expectations.
At 17:30 on September 28, the central bank's official website announced that the National Foreign Exchange Market Self-Discipline Mechanism Video Conference was held on September 27. The meeting emphasized that the foreign exchange market is of great importance and maintaining stability is the first priority. The RMB exchange rate remains basically stable and has a solid foundation. The current RMB exchange rate formation mechanism is suitable for China's national conditions and has withstood the test of multiple rounds of external shocks in history. The People's Bank of China has accumulated rich response experience and can effectively manage market expectations. The meeting said, "It is necessary to realize that the exchange rate point is inaccurate, and two-way fluctuation is the norm. Don't bet on the unilateral appreciation or depreciation of the RMB exchange rate. You will lose if you bet on a long time." The meeting also pointed out that the RMB exchange rate has remained basically stable at a reasonable equilibrium level since this year. CFETS RMB exchange rate index is basically the same as at the end of 2021. The RMB exchange rate against the US dollar depreciated, but the depreciation was only half of the appreciation of the US dollar during the same period; the RMB appreciated significantly against the euro, pound and yen, and is one of the few strong currencies in the world at present. After the news of the meeting was released, the offshore RMB exchange rate against the US dollar immediately rose by nearly 400 basis points in the short term.
The next day, September 29, the People's Bank of China and the State Administration of Foreign Exchange made many statements within one day, supporting the Chinese economy and the RMB.
At 15:30 on the same day, the official website of the People's Bank of China announced the news that the Monetary Policy Committee held the regular meeting of the third quarter of 2022. The meeting believes that the RMB exchange rate expectation is generally stable, with two-way floating and elasticity enhanced, and has played the role of a macroeconomic stabilizer. The meeting pointed out that it is necessary to further deepen the market-oriented exchange rate reform, enhance the flexibility of the RMB exchange rate, guide enterprises and financial institutions to adhere to the concept of " risk neutral ", strengthen the management of expectations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
Subsequently, the State Administration of Foreign Exchange released the "China Balance of Payments Report for the First Half of 2022". The report said that in the first half of 2022, in the face of a complex and severe international environment, my country effectively coordinated epidemic prevention and control and economic and social development, maintained overall stability in the overall economic and social development, and the domestic economy stabilized and rebounded, effectively boosting market expectations and confidence.The resilience of the foreign exchange market has been significantly improved, and the elasticity of the RMB exchange rate has been enhanced, and it has remained basically stable at a reasonable equilibrium level. In the second half of 2022, there are still many external instability factors. The long-term positive fundamentals of my country's economy will not change. The internal foundation of my country's balance of payments remains stable. The current account will maintain a reasonable surplus. The stability of cross-border two-way investment is expected to gradually improve.
At around 5 pm that day, the State Administration of Foreign Exchange issued another answer to reporters' questions from Deputy Director and Spokesperson Wang Chunying on the balance of payments situation since 2022. Wang Chunying pointed out that many aspects of data show that my country's current balance of payments is generally stable, and cross-border two-way investment will show a more balanced development trend. She specifically mentioned that "RMB assets have stable investment returns and diversified investment value worldwide. In the long run, international investors' willingness to allocate RMB assets is still strong overall."
Wang Chunying said that overall, the trend of continued recovery of the domestic economy in the future is certain, and the determination to continue to expand high-level opening up is firm. The advantages of price stability are more obvious. The transformation and upgrading effects of manufacturing industry are gradually emerging. my country's internal foundation of balance of payments is still stable. This is also the fundamental support for the stability of my country's foreign exchange market and RMB exchange rate.
htmlOn September 30, the State Administration of Foreign Exchange released the foreign debt data at the end of June 2022. Wang Chunying once again emphasized in answering reporters' questions that overall, my country effectively coordinates epidemic prevention and control with economic and social development. The fundamentals of the economy have strong resilience, sufficient potential, broad room for maneuver, and long-term improvement have not changed. Chinese assets, including RMB bond , are still very attractive to foreign capital, and the foundation for maintaining overall stability of the scale of foreign debt is still solid. RMB rebounded and rose for two consecutive days
The "peace of mind" distributed by the financial authorities has an immediate effect. In the last two trading days before the holiday, the RMB exchange rate started a strong rebound mode.
On September 29, the spot exchange rate of RMB against US dollar 16:30 closed at 7.2000 at the day, up 458 basis points from the previous trading day; after entering the night trading time, the onshore RMB exchange rate continued to rebound, regaining the 7.20, 7.19, 7.18, 7.17, 7.16, 7.15, 7.14 and 7.13 marks, up more than 1,000 points from the previous trading day.
More reflects the expectations of international investors that the offshore RMB against the US dollar also soared sharply. After 22:30 Beijing time on the 29th, the offshore RMB once recovered the 7.09 mark, with the lowest level reaching 7.0892, and the rebound rate exceeded 1,200 points from the intraday low of 7.2157 at around 15:30 on the same day.
On September 30, the RMB mid-price against the US dollar and the spot exchange rate continued to rise. Data from the China Foreign Exchange Trading Center showed that the central price of the RMB against the US dollar was 7.0998 on September 30, up 104 points. The spot exchange rate opened at in the morning and closed at and closed at 7.11 mark, further recovered at 7.10 and 7.09 marks during the session, and closed at 7.0931 at 16:30, up 1,069 basis points from the previous trading day.
Originally, the onshore RMB exchange rate day-to-day closing price has fallen by 1,354 basis points in the three trading days from Monday to Wednesday, but after the rebound in the last two days, the exchange rate has risen by 173 basis points this week.
The decline of the US dollar index helped the RMB exchange rate counterattack
More than market insiders pointed out that the strong rebound of the RMB exchange rate in the past two days is not only due to the effectiveness of the policy of stabilizing the exchange rate, but also closely related to the decline of the US dollar index.
On September 30, as of the end of the New York foreign exchange market, the US dollar index, which measures the US dollar against six major currencies, fell 0.12% to 112.1160, while on September 27, the US dollar index rose to 114.78, with a significant pullback in recent days.
There are foreign banks foreign exchange traders said that the rapid recovery of lost territory in the past two days is mainly due to three major factors. First, the UK's intervention in the bond market has significantly weakened the panic in the financial market, driving the US dollar index to fall and the RMB exchange rate valuation to rebound; second, a series of exchange rate stabilization measures for relevant Chinese departments have begun to play a role, and overseas quantitative investment institutions have begun to cut short positions in the RMB; third, some investment institutions have closed their positions in the early stage before the holiday to avoid additional losses to their own investment due to exchange rate fluctuations during the holidays.
Expert: The subsequent depreciation of the RMB exchange rate is limited
On October 1, the last quarter of this year has officially started. What kind of market will the RMB exchange rate emerge? Experts generally expect that although the RMB exchange rate will be under pressure in the short term, there is limited room for further depreciation.
Minsheng Bank Chief economist Wen Bin believes that there is little room for further depreciation of the RMB exchange rate in the fourth quarter. First, the US dollar index has limited room for upward trend; second, China's balance of payments can still maintain an overall balance, providing fundamental support for the RMB exchange rate; third, the pressure of seasonal foreign exchange purchases is reduced; in the third quarter, the exchange rate market usually faces seasonal pressures such as overseas dividends of enterprises, rising overseas procurement demand, and foreign exchange purchases, while the seasonal pressure in the fourth quarter will return to neutral; fourth, the demand for existing foreign exchange settlement of enterprises is expected to be stimulated at the current point; fifth, the central bank's exchange rate policy toolbox is still relatively rich, which will effectively play a role in guiding exchange rate expectations.
The latest "China Economic and Financial Outlook Report" released by the China Banking Institute also believes that the RMB exchange rate will continue to be under pressure in the fourth quarter, but the downward space is limited, and the medium- and long-term trend is relatively resilient. The reasons for the short-term pressure on the RMB exchange rate include: First, the Federal Reserve's pace of hikes in rate continues to rise. Curbing inflation is still the current primary target of the Federal Reserve (US CPI was still as high as 8.3% month-on-month in August), and it is expected that will continue to raise interest rates in in November, and the strong appreciation of the US dollar will increase the pressure on the depreciation of the RMB. Second, weakening of foreign demand has slowed down China's exports, and a decline in trade surplus will lead to pressure on the RMB exchange rate.
The supporting factors of the RMB exchange rate mainly include two aspects. First, market expectations are generally stable. The exchange rate in August reached 71%, which is the highest level in recent years, with a exchange rate of 67%, which is basically the same as the monthly average since 2022, reflecting the overall stability of market entities' willingness to settle and sell foreign exchange . Second, the scale of foreign exchange reserves is stable and abundant. As of the end of August, China's official foreign exchange reserve assets were US$3054.9 billion, and the balance of various foreign exchange deposits of financial institutions was US$953.7 billion, all of which remained at a high level. This is the "ballast stone" to effectively deal with excessive fluctuations in the RMB exchange rate.
Daifeng Securities It is expected that the subsequent depreciation space for RMB exchange rate in this round is relatively limited after the early adjustment. At the end of the year, as the relative positions of China-US monetary policies and economic cycles reversed, the RMB exchange rate may be able to stabilize at the level of 7.2 and turn into a volatile situation. Tianfeng Securities judged that the mid-term depreciation span of this round of RMB exchange rate will be significantly narrowed to one-third of the historical average span, that is, about half a year.
htmlOn September 5, in the regular policy briefing of the State Council, Liu Guoqiang, Vice Governor of the People's Bank of China, said 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. Two-way fluctuations in the short term are a normal state, 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 think nothing will happen, and there will be no accidents." text/Beijing Youth Daily reporter Cheng Jie
edit/Tianye
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