Beijing Daily Client | Reporter Pan Fuda
After more than two years, the exchange rate of RMB against the US dollar has once again entered the "7" era. On the evening of September 15, more reflecting the expectations of international investors the offshore RMB exchange rate against the U.S. dollar fell below the "7" integer mark during the session, with the lowest depreciating to 7.0183. At the same time, the onshore RMB exchange rate against the US dollar is also approaching the "7" mark, with the lowest depreciation to 6.9962.
"In different markets and macroeconomic backgrounds, the point of 7.0 has different meanings." Oriental Jincheng chief macro analyst Wang Qing believes that this background includes three aspects: First, in the process of the RMB exchange rate "breaking 7", what level is the U.S. dollar index ; second, where are the three major RMB exchange rate indexes; third, what is the status of the comparison of domestic and foreign economic fundamentals.
From August 2019 to July 2020, the RMB exchange rate against the US dollar continued to fluctuate around 7.0. The average US dollar index at that time was around 98, which was far lower than the current level; at the same time, the three major people's exchange rate indexes at that time were about 10% lower than now. This means that it is also "breaking 7", and the current trend of the RMB is obviously stronger. The reason behind this is . At this stage, the domestic economy as a whole is in the repair stage. At that time, the macroeconomy was facing the pressure of the Sino-US trade war and the subsequent epidemic. 's current economic fundamentals are stronger than the period from 2019 to 2020 when it "broke 7".
Looking into the future, mainly due to factors such as the Federal Reserve will still be significantly ahead of the European and Japanese central banks in terms of policy tightening pace, the US dollar may remain temporarily strong before the end of the year, and the RMB may still face certain depreciation pressure against the US dollar. However, as the domestic economic recovery momentum increases and my country's international balance of payments is expected to maintain a surplus, it is difficult to effectively gather expectations for RMB depreciation. "Breaking 7" in the short term does not mean that the RMB exchange rate will experience a sharp downward process, especially a rapid downward trend away from the US dollar index.
Wang Qing believes that the RMB will maintain a reverse fluctuation pattern similar to that of the US dollar index during the year. In this process, there is no point that must be held. What is really important is to keep the RMB exchange rate index basically stable.
At present, the regulatory authorities have abundant policy tools to control the foreign exchange market. If there are abnormal fluctuations in the RMB exchange rate out of the trend of the US dollar index, in the next step, the central bank will not only lower the foreign exchange deposit reserve ratio, but also timely announce the restart of countercyclical factors , increase the foreign exchange risk reserve ratio, increase the offshore market central bank bill issuance scale, and strengthen cross-border liquidity management and other measures. In addition to the above specific policy measures, regulators can further strengthen market communication, guide market expectations, and prevent procyclical behavior in the foreign exchange market from causing "herd effect".
"With the support of economic fundamentals, it will not be difficult to stabilize the exchange rate in the future, that is, to keep the three major RMB exchange rate indexes basically stable. This also means that exchange rate factors will not pose substantial constraints on the flexible adjustment of monetary policy in the second half of the year." Wang Qing said.
Faced with this round of depreciation of the RMB exchange rate, Liu Guoqiang, deputy governor of the Central Bank, responded at a briefing of the State Council Information Office on September 5 that China's foreign exchange market is currently operating normally and cross-border capital flows are orderly. Although the spillover effects of U.S. monetary policy have an impact, the impact is controllable.
Liu Guoqiang said that there has not been a comprehensive depreciation of the RMB. The recent main focus is on the United States to increase its monetary policy adjustments. Against the background of the appreciation of the U.S. dollar, other reserve currencies in the SDR basket have depreciated significantly against the U.S. dollar. However, compared with other non-U.S. dollar currencies, the depreciation of the RMB is the smallest.
Liu Guoqiang said when looking into the future: "The long-term trend of the RMB should be clear. In the future, the world's recognition of the RMB will continue to increase. This is a long-term trend. However, in the short term, two-way fluctuations are the norm. There will be two-way fluctuations, and there will not be a ' one-sided market '. However, the exchange rate point is unpredictable, so everyone should not bet on a certain point."Reasonable balance and basic stability are what we like to see. We also have the strength to support it. I think nothing will happen and we will not allow it to happen. ”
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