RMB exchange rate recently showed signs of stopping and rebounding.
htmlOn June 6, the mid-price of the RMB exchange rate against the US dollar rose by 404 basis points. On the morning of the 6th, the onshore RMB exchange rate against the US dollar rose above 6.64 yuan, setting a new high in the past month.Where will the RMB exchange rate go in the future?
Onshore RMB exchange rate rebounded and rebounded
On the first trading day after the short holiday, the RMB exchange rate continued its rebound momentum.
On the morning of June 6, as of 11:30, the onshore RMB exchange rate against the US dollar was 6.6535 yuan, up 215 basis points from the previous closing price . The exchange rate of the market once rose above 6.64 yuan during the session, reaching a high of 6.6391 yuan, setting a new high in the past month.
Source: Wind
The mid-price of the RMB exchange rate against the US dollar announced by the Forex Trading Center in the morning was 6.6691 yuan, up 404 basis points from the previous value.
Offshore RMB exchange rate against the US dollar fell, at 6.6593 yuan as of 11:30, down 56 basis points from the closing price of the previous trading day, but is still at a recent high.
Source: Wind
Before the Dragon Boat Festival, the RMB exchange rate had already stopped falling and rebounded. On June 2, the onshore RMB exchange rate against the US dollar rose by 191 basis points; the offshore RMB exchange rate against the US dollar increased by and , with an increase of 442 basis points in a single day to 6.6540 yuan. On June 3, the offshore RMB exchange rate against the US dollar, which was still trading, once rose to 6.6164 yuan, the highest since May 5.
Why did the RMB exchange rate stop falling and rebound?
CICC Li Liuyang's team believes that under the influence of the impact of USD index hitting the top and pulling back, the domestic epidemic continues to ease, and the confidence in economic stabilization is strengthening, the RMB exchange rate against the US dollar has obvious signs of a stop to decline in the short term.
returns to two-way fluctuations
Li Liuyang's team believes that the period of rapid depreciation of the RMB exchange rate may have ended. The long and short factors that affect the changes in the RMB exchange rate center in the second half of the year are relatively balanced. The US dollar peaks, economic rebound and adjustments to the US export tariffs may become important forces supporting the RMB exchange rate; while external demand pressure and valuation correction may become the force to weaken the RMB exchange rate; the impact of cross-border revenue and expenditure is also relatively balanced.
"Overall, the RMB exchange rate will stabilize around 6.65 yuan in the second half of this year. The RMB exchange rate returns to two-way fluctuations," the team said.
"There are foundations and conditions for the RMB exchange rate to remain basically stable." Bank of China Securities Global Chief Economist Guan Tao analyzed that China has a large trade surplus, direct investment is a net inflow, private foreign exchange asset holdings have increased, macro-prudential measures, capital foreign exchange management and foreign exchange reserves intervention under the "five-fold protection", China has the foundation and conditions for maintaining the basic stability of the RMB exchange rate at a reasonable equilibrium level.
Guan Tao said that in the second half of the year, we should pay attention to the impact of economic recovery, the US dollar index, and the epidemic situation on exchange rate .
People's Bank of China People's Bank of China Deputy Governor Pan Gongsheng recently said that the two-way fluctuations in the RMB exchange rate remain basically stable at a reasonable equilibrium level.
Pan Gongsheng said that market institutions believe that the difficulty of stabilizing the economy while controlling inflation is increasing, and the signal of tightening monetary policy in the euro zone has increased, which has led to a decline in the US dollar exchange rate in the recent past. In addition, with the easing of the epidemic and the effectiveness of various policies to stabilize growth appearing, domestic production and supply advantages continue to exist, and goods trade is expected to maintain a reasonable surplus scale. At the same time, with the opening up of my country's financial market, the return on RMB assets investment is stable, and it will continue to attract overseas investors to invest in China.
"The stable operation of my country's foreign exchange market has a better foundation than the previous five months." Pan Gongsheng said.
Edit: Ye Song
