welcomes support and reasoning. A friend sent me a private message in the background two days ago, asking me what happened to shorting RMB recently? Today we will talk about what shorting RMB is.
Everyone knows that there is a exchange price between currencies in each country, and this price is the exchange rate. The so-called short selling means that investors are not optimistic about the RMB in the exchange rate market and believe that the price of RMB exchanged for other major international currencies will fall, that is, the RMB will become worthless and depreciate in the international market. Then he will make investments related to the RMB based on this judgment. This operation is mainly carried out by international investors on the offshore market .
The so-called offshore market is carried out in markets outside mainland China, such as trading in financial centers such as Hong Kong and Singapore. How to short it specifically?
For example, if an investor believes that the exchange rate of the RMB against the US dollar will fall in the future, will sell the RMB. The RMB sold is not from his own hands, but borrowed. borrowed RMB from others and sold it in the market. Then, after the exchange rate of the RMB against the US dollar falls, he will buy the RMB back and return it to others with the US dollar in his hand. will be like he made a high sell and a low buy, earning the difference.
Of course, doing this is risky. first of all, the first risk is your own mistake in judgment. market did not follow the direction you expected. The RMB did not depreciate or appreciated. When this comes, you have to go to the market at a high price and buy back the RMB to others. You become a low seller and buy high, and you are the one who loses.
The second risk comes from the supply of RMB in the market. Although I had made the right judgment, the regulatory authorities or the national team intervened in the offshore market and directly controlled the amount of RMB in the offshore market, resulting in a shortage of RMB. is the so-called insufficient liquidity of RMB in the offshore market.
In this way, the cost of borrowing RMB will be greatly increased in the offshore market. If you want to sell RMB, there is nowhere to borrow, and if you want to repay RMB, there is nowhere to buy it. Or even if you can borrow it, your borrowing cost will be very high. It will not only make money but also lose money directly. will make the so-called short sellers in RMB will be blown up. Why is it said to be blown up? Because foreign exchange transactions are all leveraged.
For example, if you have a margin of 50,000, others lend you 950,000, so you get 1 million to invest. If the fluctuation range of this price is close to 5%, people will ask you to add margin as soon as possible, otherwise the 1 million you give you will be sold, which will definitely ensure that others lend you 950,000 to safely recycle it. So if those investors who short the RMB do not have enough money to add margin, then all the margin you invested before will be gone and you will lose all.
Of course, this foreign exchange transaction is very complicated in actual operation. Let’s just talk about a general reason to help the friends who ask questions understand what short selling is. In fact, although some people always want to short the RMB, in fact, in addition to being affected by the general economic situation, the RMB will also be intervened by many policy means outside the market. Speculators are still very risky to encounter RMB.
