On October 28, 2022, the head of the relevant department of the China Banking and Insurance Regulatory Commission said when talking about the active service of banking and insurance institutions to stabilize foreign trade: Over the past 30 years, all enterprises and individuals who have depreciated the RMB have suffered losses. Now I sell my local currency to buy foreign exchange, and I will definitely regret it in the future. So some netizens suggested: If we can now let the free exchange of RMB-USD, the exchange rate of and will reach 1:20 in an instant.
I remember several years ago, the United States accused our country of exchange rate operations. When we forced us to appreciate, some people argued that the real exchange rate ratio should be 1:5, and some even radically said that 1:3 was reasonable. At that time, my country's economic scale was not even half of the United States, and its industrial strength was much worse than it is now. Why is it now that someone is advocating 1:20? Is this really possible?
1. Phenomenon: Is our RMB-USD exchange really not free?
I want to say that those who quarrel about the renminbi being unable to be exchanged freely all day long, you must have a minimum cash income of 350,000 yuan per year. According to the current national tax rate, this person's annual income will exceed 400,000 yuan. And you have to save 350,000 yuan without eating, drinking or consuming, otherwise, the annual redemption limit of 50,000 is not enough?
Not to mention that you can even use the US dollar exchange limit of your parents and relatives. In this way, if you want to exchange freely, your annual income will be a problem that you may face if you have more than 1 million yuan. Just imagine: After deducting your annual income from expenses, will there be 350,000 yuan left in the bank? Is there 1.05 million? If not, what are you worried about?
is visible. If you don’t have this income, then who are you worried about not having enough exchange for? Are you worried that people who earn millions a year will not be able to exchange enough US dollars?
- In addition, if you are a company, you want to use foreign exchange, which means you can earn foreign exchange. The country is very encouraged. How much do you want to use and what business you do, just apply in advance. The country will definitely exchange it for the company.
What? Don't you want to report to the country? Then are you planning to evade taxes? Or are you preparing to violate the law? You have to report your account income clearly in your business, right? - is visible. It is not that redemption is not allowed under foreign exchange supervision. These are two different things. If you are useful, the country will definitely exchange it for you. You said you were useless, you just wanted to change it, so what kind of people would you do? What if this person borrowed money and transferred it to a foreign country?
2. Analysis: If free exchange is released, will the RMB exchange rate instantly reach above 1:20?
is simply amazing. I saw some people even think that if the RMB-USD is freely exchanged, the exchange rate reaches 1:50, which is simply unreasonable.
Even if the exchange rate is freely exchanged, the exchange rate will reach above 1:20, and the official exchange rate will definitely be close to 1:20 now. By the way, don’t young people nowadays know about the gray area market?
- The simplest truth is, if there is a strong and huge one-way demand for buying US dollars in RMB, the current price of U should be much higher than the exchange rate mid-price 7.15, which will rise to the sky. However, the current bulk trading price is 7.01-7.04 and 7.05-7.09. Today, the offshore RMB is around 7.25.
If there is really a huge net outflow demand that is suppressed, why hasn’t there been a huge price difference in the gray area market yet? If it really exists, many people will now make huge profits from through various channels for repeated arbitrage. Although the market in the gray area is small, it can also reflect the supply and demand relationship to a large extent. This is actually not necessarily related to whether the floodgate is opened. If you have money, you want to go out and if you have money, you want to come in. If you depreciate too much, more funds will pour in to acquire cheap assets. If you appreciate too much, you will flow overseas. In the end, a balance will be reached, and we are always at a balance point.
It can be said that even if you exchange it completely freely, you can exchange all the money you want to save. In the face of a plate of tens of trillions of yuan, you will not have a single splash.
3. Essence: Maintaining exchange rate stability is something that almost all countries are doing, but the methods are different
We all know that foreign exchange control is actually an invention of the United States and France, and it is also an important means to protect a country's wealth. The United States has always been pushing the RMB to appreciate, and even forced the RMB to appreciate by 40%. When the RMB depreciated sharply against the US dollar, Trump also jumped out to accuse us of being a currency manipulator, not for our own interests.
According to the data, currently 80% of the countries in the world have implemented foreign exchange controls. Some countries and regions that nominally abolish foreign exchange controls, that is, they do not directly control the collection and payment of current accounts and capital accounts that are not inhabited by non-resident exchanges, and in fact there are still some indirect controls.
- I remember an article in the Financial Times said that the most valuable experience given to China by the Asian economic crisis is foreign exchange control. When the US dollar rate hike in 2016, many people were bearish on the RMB, believing that the US dollar would break 10 against the RMB, and some people also thought that it would not be able to hold on to the 20, and in the end they were all slapped in the face.
One of the netizens directly sold more than 1 million yuan in Jing'an District, Shanghai in 2014, and exchanged it for US dollars. He also stocked a large amount of vacuum rice, waiting for the opportunity to use US dollars to buy the bottom of Chinese assets, but was eventually slapped in the face.
- Therefore, it can be said that maintaining exchange rate stability is something that almost all countries are doing, but the methods are different. In this world, there is almost no completely uncontrollable exchange rate system. Even the United States gradually stopped interfering in the exchange rate after 2000, but did not declare that it would give up dirty floating. In addition, Japan has not continued to maintain the exchange rate twice this year.
The last words: It turns out you are not discussing economics, but studying finances?
Many people alienate currency and do not recognize that currency itself is also a commodity and will also be affected by supply and demand. Our exports are much greater than imports. If we relax exchange rate controls, we will inevitably appreciate. Exports are exchanged for RMB for US dollars, imports are exchanged for RMB for RMB. The result of oversight is naturally that the RMB is becoming increasingly scarce, and appreciation is inevitable.
- In short, economists are not fortune tellers, they study rules, and those remarks that are full of train running are actually the specialties of speculators. We should not look at Western economics. In fact, it depends on what the United States needs. When the United States needs to crack down on our manufacturing industry, it says that according to economics, the RMB should appreciate, and the United States needs capital to reduce its holdings of the RMB. When the US dollar increases, they say that the RMB must depreciate. Isn’t this Western economics like a dog-skinned plaster?
