profile picture. China News Agency reporter Yang Bo, photographed by
, China News Agency, Beijing, February 7th. Title: China's economic war against the epidemic: The RMB exchange rate trend is returning to normal
Author Xiabin
The first week of the opening of the Year of the Rat, the RMB exchange rate experienced a decline first and then rose.
RMB against US dollar exchange rate mid-price fell for four consecutive days after the opening, and rose 217 basis points on the 7th to 6.9768; the spot exchange rate of RMB on the shore and offshore against US dollar returned to the 6.9 range after both "breaking 7".
As the market sentiment caused by the new coronavirus gradually digests, the RMB exchange rate trend is returning to normal.
short-term depreciation was expected
"The first thing the epidemic affected is market sentiment." Wang Youxin, a researcher at the Bank of China Research Institute, told China News Service reporters.
In the short term, sentiment can often influence the trend of the financial market. Wang Youxin bluntly stated that the financial market is greatly affected by emergencies and uncertainties, and is prone to short-term overshoots. The epidemic gradually spread during the Spring Festival, causing major fluctuations in market sentiment. Therefore, after the opening of the market on February 3, the exchange rate of showed a major adjustment, which is a normal market reaction.
Previously, World Health Organization announced that it would list the novel coronavirus pneumonia epidemic as a "public health emergency of international concern" (PHEIC). CITIC Securities analyst Mingming believes that after the PHEIC was confirmed, the currencies in the places where the epidemic broke out usually faced depreciation pressure. For example, after the recognition of the H1N1 influenza epidemic in April 2009, the US dollar index declined and the US dollar depreciated; after the recognition of the polio epidemic in May 2014, the outbreak of the epidemic, the Pakistani currency rupee also depreciated. Therefore, it is also expected that the RMB will depreciate to a certain extent after the new crown pneumonia epidemic is recognized.
Multiple factors affect the exchange rate
short-term overshoot is caused by emotions, and the impact of other spillovers caused by the epidemic on the exchange rate is also worth paying attention to.
Wang Youxin pointed out that the epidemic will affect corporate production, supply chain and logistics, thereby affecting prices and economic growth. Affected by the combined impact of the Spring Festival and the epidemic, the prices of various daily necessities in the market have risen. It is expected that the price index will remain at a high level in the first quarter. From the perspective of purchasing power parity, it will weaken the international competitiveness of the RMB.
In order to prevent the further spread of the epidemic, local governments and enterprises are currently generally adopting measures such as extending holidays, shutting down work and waiting for production or rotating jobs. The production capacity is compressed, which will put certain pressure on China's economic growth, export trade and foreign exchange receipts and expenditures.
In terms of cross-border capital, Zhang Yu, chief macro analyst of Huachuang Securities , pointed out that at present, the epidemic has caused domestic demand to decline and imports to decrease in the first quarter, the surplus of import and export of goods will increase, while Chinese people's travel consumption will also decrease, and the service deficit will shrink; direct investment in financial accounts is less affected by the epidemic, and foreign capital entry is expected to remain stable, and the investment in China's securities market continues to increase. As a result, cross-border capital is generally stable, and the exchange rate will fluctuate by trading factors, but the overall fundamentals are relatively stable.
medium- and long-term trends have no fundamental impact
In the past few trading days, the RMB exchange rate has shown characteristics of rising and declining and small fluctuations in both directions. In the view of Pan Gongsheng, Vice Governor of the People's Bank of China, this shows that China's financial market has increased resilience and gradually maturity.
Chief macro analyst Xie Yaxuan of China Merchants Securities said bluntly that the new crown pneumonia epidemic is more likely to be a short-term impact, and will not have a fundamental impact on the medium- and long-term trends of the Chinese economy or the RMB exchange rate.
He pointed out that since 2017, the onshore market RMB exchange rate has actually fluctuated in two directions within the range of 6.2370 to 7.1962, with both rising and declining. "There are many factors that affect the RMB exchange rate. The epidemic is likely to be just a short-term impact, and there is no need to panic operations based on these short-term factors."
Wang Youxin said that due to the impact of the epidemic, China's economic growth rate is expected to be further under pressure this year, and monetary policy will become more relaxed, but positive factors such as the improvement of the external situation, the increase in financial market opening, and the increase inflow of foreign capital are still there. Therefore, the long-short game between RMB exchange rate will increase, and more range fluctuations will appear.
"However, considering that the epidemic is expected to gradually calm down after the first quarter, economic production activities will gradually recover, and more optimism will accumulate and release. After experiencing stress tests from external shocks in the past two years, market entities have become more rational and calm. It is expected that the RMB exchange rate will remain basically stable, and will gradually converge after a short-term adjustment and return to the normal state of two-way fluctuation." Wang Youxin said, "We should have full confidence in this." (End)
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