Every reporter: Zhao Jingzhi Every editor: Ma Ziqing
After the offshore RMB surged 1,075 points against the U.S. dollar on November 29, as of press time on the 30th, the RMB rose again by more than 500 points, regaining the 7.10 mark again.
US dollar/RMB (offshore) trend
Source: Flush iFinD
Judging from the US dollar index , the US dollar index rose slightly on the 29th, and the RMB strengthened sharply away from the US dollar index; as of press time on the 30th, the US dollar index fell by 0.32%, and the RMB against the US dollar increased by about 0.7%.
Zhou Maohua, a macro researcher at the Financial Markets Department of China Everbright Bank, told reporters that the RMB exchange rate has rebounded recently. On the one hand, the country has continued to optimize epidemic prevention measures and actively promoted accurate and efficient implementation. Policies such as stabilizing the property market have continued to exert force, and the market is more optimistic about the prospects for economic recovery. On the other hand, the recent weakening of the US dollar has led to the rebound of non-US currencies such as the renminbi, and the rebound in market risk sentiment has driven capital inflows into RMB assets.
The exchange rate of RMB against the U.S. dollar rose sharply for two consecutive days
On November 30, the offshore RMB rose sharply against the U.S. dollar, rising by nearly 500 points as of the day of publication. On the previous day, the 29th, the offshore RMB also rose sharply by more than 1,000 points against the US dollar. The current exchange rate of the RMB against the US dollar has once again recovered to 7.10. As of 21:00 on
30, the onshore RMB also rose above 7.10 against the US dollar, with a quote of 7.0700, a single-day increase of more than 800 basis points.
USD/RMB (onshore) trend
Source: Flush iFinD
In terms of news, in recent days, policies to support domestic economic development have been frequent.
On November 25, the central bank announced that it would cut the reserve requirement ratio by 0.25 percentage points across the board on December 5, releasing about 500 billion yuan in long-term funds.
Regarding the purpose of this reserve requirement ratio , the relevant person in charge of the central bank stated that should maintain reasonable and sufficient liquidity, maintain reasonable growth in the total amount of money and credit, implement a package of policy measures to stabilize the economy, increase support for the real economy, and support effective improvement in economic quality and reasonable growth in quantity. The second is to optimize the capital structure of financial institutions, increase the long-term stable funding sources of financial institutions, enhance the capital allocation capabilities of financial institutions, and support industries severely affected by the epidemic and small, medium and micro enterprises. Third, this RRR cut reduces the capital costs of financial institutions by approximately 5.6 billion yuan per year, which can help reduce the comprehensive financing costs of the real economy through financial institutions.
On the evening of November 28, the China Securities Regulatory Commission announced the adjustment and optimization of 5 measures in equity financing to support the stable and healthy development of the real estate market, which was interpreted by the industry as the "third arrow" to support the financing of real estate companies.
A spokesman for the China Securities Regulatory Commission responded that the stable and healthy development of the real estate market is related to the stability of the financial market and the overall economic and social development. The China Securities Regulatory Commission resolutely implements the decisions and arrangements of the Party Central Committee and the State Council, actively brings into play the functions of the capital market, supports the implementation of plans to improve the balance sheets of high-quality real estate companies, increases equity replenishment, promotes the real estate market to revitalize stock, prevent risks, transform and develop, and better serve and stabilize the macroeconomic market. The China Securities Regulatory Commission decided to adjust and optimize 5 measures in equity financing and they will be implemented from now on.
Pan Gongsheng: The resilience of my country's foreign exchange market continues to increase and will maintain steady operation
It is worth noting that since late September, the fluctuations in the exchange rate of the RMB against the US dollar have increased significantly.
USD/RMB (offshore) trend
Source: Flush iFinD
Oriental Jincheng chief macro analyst Wang Qing previously told reporters that in the context of the Federal Reserve continuing to rapidly interest rate and the global economy increase in downside risks, the current global capital market sentiment fluctuates violently and is prone to ups and downs.
Wang Qing pointed out, "The recent violent fluctuations also show that the momentum of the US dollar's rapid unilateral rise after August has weakened, and the global foreign exchange market is shifting into a state of wide horizontal fluctuations. As far as the RMB exchange rate is concerned, the current domestic economy generally maintains an upward recovery momentum, and my country's current account will continue to be in a state of large-scale surplus. fundamentals do not support the rapid depreciation of the RMB independently of the trend of the US dollar."
At present, the market plays a decisive role in the formation of the RMB exchange rate. The RMB exchange rate fluctuates in both directions, with increased flexibility, and plays the role of an automatic stabilizer of macroeconomics and the balance of payments.
"China's foreign exchange market has shown new characteristics and its resilience continues to increase. "Pan Gongsheng, deputy governor of the People's Bank of China and director of the Foreign Exchange Administration, said at the 2022 Financial Street Forum Annual Meeting on the 21st of this month that compared with the previous two periods of U.S. dollar appreciation, the RMB exchange rate has become less sensitive to fluctuations in the U.S. dollar index since 2021. From a global perspective, compared with major developed and emerging market currencies, the People's The depreciation of the currency is at an average level. Although cross-border capital flows are volatile, they are generally stable and orderly.
In addition, Pan Gongsheng pointed out that looking forward, China's foreign exchange market will maintain stable operation. On the one hand, the risk of economic recession in major developed countries will remain higher than the policy target. Monetary policy will The overall tightening is maintained, and the US dollar is still likely to fluctuate at high levels in the short term. Market institutions predict that the US dollar's appreciation momentum will weaken and the strong appreciation cycle may be coming to an end. On the other hand, the fundamentals of China's long-term economic improvement will not change.
In addition, the financial sector has introduced a number of financial support policies to cooperate with the real estate market authorities and local governments to support rigid and improved housing demand, maintain stable and orderly real estate financing, increase financial support for guaranteed housing, protect the legitimate rights and interests of housing consumers, resolutely block and weaken risk spillovers, and stabilize market expectations and confidence.
“The above policies have played a good role in counter-cyclical adjustment and produced positive market effects. We will adhere to the central government's guidelines and policies on the development of the real estate market, adhere to the principles of marketization and rule of law, combine long-term and near-term efforts, and address both the symptoms and root causes to promote the healthy and sustainable development of China's real estate market. In the future, changes in the internal and external macro environment will help maintain the stable operation of China's foreign exchange market. "Pan Gongsheng said.
expert: Return to exchange rate neutral, focus on main business
There is still a lot of uncertainty in the foreign exchange market. Regarding the Federal Reserve, last Wednesday, the Federal Reserve released the minutes of its November meeting, which showed that slowing down interest rate hikes has become the mainstream view within the Federal Reserve, and pointed out for the first time that the probability of a recession in the U.S. economy next year is around 50%. This has increased market expectations for a U.S. economic recession and forward interest rate cuts.
However, this week, many Federal Reserve officials once again released "hawkish" signals. According to Associated Press report Dow, New York Federal Reserve Bank President John Williams said in a speech in New York that day that there are signs that the inflation situation is easing, but the Fed "still has more work to do" to reduce the inflation rate to close to the 2% target.
On the same day, James Bullard, president of the Federal Reserve Bank of St. Louis, pointed out that financial markets had underestimated the Fed's determination to take more aggressive measures in response to the worst inflation in 40 years. The Fed may have to lower interest rates next year, he says L4 remains above 5%, and this interest rate level may continue until 2024.
It is reported that on the 2nd of this month, the Federal Reserve just announced that it would raise the target range of federal funds interest rates by 75 basis points to 3.75% to 4%.
Wang Qing previously told reporters that in the context of the Federal Reserve's continued rapid interest rate hikes and the increasing downside risks to the global economy, the current global capital market sentiment fluctuates violently and is prone to ups and downs.
According to reporter statistics, since the end of October, the offshore RMB has risen by more than 1,000 points against the U.S. dollar many times in a single day. For example, on October 26, the offshore RMB rose by 1,264 points against the U.S. dollar; on November 4, the offshore RMB rose by 1,541 points against the U.S. dollar; on November 10, the offshore RMB rose by 1,192 points against the U.S. dollar; and on November 29, the offshore RMB rose by 1,075 points against the U.S. dollar.
“Recently, the global foreign exchange market has been highly volatile. Judging from the trend, there are still many global uncertainties, and there are certain recurrences and fluctuations in the foreign exchange market. "Zhou Maohua told reporters that in this environment, the risk of market betting on unilateral exchange rate movements is greater. Enterprises should rationally choose to return to exchange rate neutrality, focus on the main business, make good use of foreign exchange derivatives tools to manage risks, gradually increase the cross-border use of RMB in foreign trade, and effectively avoid the risk of exchange rate fluctuations.
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