CNR News from Beijing, December 6 (Reporter Jin Long) In early trading on the 6th, the offshore RMB against the U.S. dollar rose strongly above the 6.95 mark, rising by more than 220 points during the day, reaching a maximum of 6.9473.
As of press time, offshore RMB is trading at 6.9517. Counting from the stage high, it has risen by more than 3,500 basis points in one month.
On December 6, the central parity rate of the inter-bank foreign exchange market RMB against the US dollar was reported at 6.9746, an increase of 638 basis points.
(Picture from the China Foreign Exchange Trading Center website)
returned strongly to within "7"
Previously, the "China Monetary Policy Implementation Report for the Third Quarter of 2022" released by the central bank showed that in the next stage, the RMB exchange rate will continue to maintain basic stability at a reasonable and balanced level with a solid foundation, and there are two major supporting factors: fundamentals and policy aspects.
"As various regions optimize and adjust epidemic prevention and control measures, and the country effectively coordinates epidemic prevention and control and economic and social development, the disruption and suppression of economic activities by the epidemic is expected to weaken. The market is more confident in the effective resolution of multiple problems such as production disruptions, weak demand, and expected fluctuations, and is more confident in the RMB exchange rate." Pang Ming, chief economist and director of the research department of JLL Greater China, told cctv..
Looking back on November, Choice data shows that in November, the onshore RMB exchange rate against the US dollar rose by 3.1%, and the offshore RMB exchange rate against the US dollar appreciated by nearly 4% during the month. The RMB exchange rate rose by more than 1,000 points several times that month. Among them, the RMB performed particularly well on the last two trading days of November, with the onshore and offshore RMB exchange rates rising by nearly 1,500 points and more than 2,000 points respectively on the two trading days at the end of the month.
Since November, the RMB/USD exchange rate has continued to rise from a low of close to 7.3 at the end of October. Since December, the RMB has continued its strong rebound, once approaching 7. As of December 2, the offshore RMB was trading at 7.0256 against the U.S. dollar, and the onshore RMB was at 7.0380 against the U.S. dollar.
On December 5, shortly after the opening of the onshore RMB-USD exchange rate, it rose above the "7" mark and reported at 6.9902, an increase of 478 basis points from the previous closing price of ; since then, the upward trend has continued in trading, successively breaking through the 6.98 and 6.97 marks.
Expert: Continuing the normal state of two-way fluctuations
Regarding the future trend of the RMB exchange rate, Zhixin Investment's chief economist and director of the research institute Lian Ping said that the RMB exchange rate against the US dollar may fluctuate around 7.0.
"For enterprises, especially those with a large proportion of foreign currency revenue and large foreign currency liabilities, they should actively adapt to the new normal of increased flexibility and amplitude of two-way fluctuations in the RMB exchange rate, firmly establish the concept of exchange rate risk neutrality, strengthen risk prevention awareness and capabilities, do a good job in exchange rate risk assessment and risk, and based on 'value preservation' Non-'value-added' exchange rate risk management principles, reasonable and prudent transactions, moderate hedging of exchange rate exposures and control of currency mismatches, reasonable arrangement of asset and liability currency structures, active use of exchange rate hedging services provided by financial institutions such as derivatives, avoidance of foreign exchange speculation that deviates from risk-neutral , adhere to sound operations and maintain normal production and operations," Pang Ming explained.
BOC Securities Global Chief Economist Guan Tao believes that in this round of dollar strength, China's independent monetary policy has played an important role in maintaining the relatively stable operation of our exchange rate and economy.
CITIC Securities Chief Economist Ming Ming believes that the current low point of the RMB spot exchange rate against the US dollar may have been confirmed, and the probability of the RMB exchange rate maintaining a wide range of fluctuations in the short term is high.
Pang Ming pointed out that with the increasing probability of recession in other major economies, the gradual slowdown in the pace of Fed interest rate hikes, and the weakening of the driving force of the U.S. dollar index, there will be limited room for a sharp rise in the U.S. dollar index in the future.
