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Data from the China Foreign Exchange Trading Center shows that on January 24, 2018, the central parity rate of the RMB against the U.S. dollar in the interbank foreign exchange market quoted 1 US dollar to RMB 6.3916, an increase of 93 basis points.
On the previous trading day, the central parity rate of the RMB against the US dollar was reported at 6.4009. The U.S. dollar index took another hit in the overnight market. It fell below the 90 integer mark for the first time since December 31, 2014. Some analysts pointed out that looking back at the recent tightening cycle in the United States, we can find that the current global macro environment has many similarities with 2004, and the U.S. dollar index may drop another 10%. Industry insiders believe that with the continuous appreciation of the RMB exchange rate against the US dollar, market expectations have become more stable, and the attractiveness of RMB assets to overseas investors has gradually emerged.
Trends in the central parity rate of the RMB against the U.S. dollar
Since 2018, the RMB has appreciated strongly against the U.S. dollar by nearly 1,100 basis points, quickly breaking through the 6.40 mark during the session. The magnitude and speed of the appreciation are like the "reappearance of the scene" in early 2017, and this wave of RMB appreciation has lasted for more than a month, and it is likely to replicate the breakthrough trend in the third quarter of last year.
Market participants pointed out that since the beginning of the year, the RMB has exceeded 6.4 and the Shanghai Composite Index has returned to above 3,500, both of which reflect the increase in market risk appetite. Against the background of my country's strong economic growth resilience and tight monetary policy margins, it is a high probability event that the RMB exchange rate will continue to stabilize. This will provide good support for risky assets, especially equity assets. The overall domestic impact of the stabilization of the RMB exchange rate will Improved liquidity conditions will also help the bond market recover. Looking further, as the RMB exchange rate truly realizes two-way floating, the enthusiasm of overseas capital to allocate Chinese bond and stock assets will tend to increase.
The following is the technical analysis of today’s exchange rate trend of RMB against the US dollar:
| USD/RMB During the day: short-term adjustment. | |
| Turning Point: 6.4135 Trading Strategy: Below 6.4135, bearish, target price is 6.3885, then 6.3770. alternative strategy: on 6.4135, bullish, target price is set at 6.4260, then 6.4430. Technical Comments: As long as there is still a resistance level of 6.4135, there is a bearish trend in price fluctuations. support and resistance levels: 6.4430 6.4260 6.4135 6.3955 Closing price 6.3885 6.3770 6.3640 |
Zhu Min, former deputy governor of the Central Bank of China: China has no There is not much room to raise interest rates
This Tuesday (January 24) Reuters reported that Zhu Min, the former deputy governor of the People's Bank of China, recently said that China basically does not have much room to raise interest rates because inflation is still sluggish. At the same time, authorities hope to reduce the economy's debt burden.
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"Deleveraging will continue, but I see no reason to raise interest rates," Zhu Min said at the Reuters Global Markets Forum on the sidelines of the World Economic Forum in Davos. Zhu Min is also a former vice president of the International Monetary Fund (IMF).
In terms of inflation, he said that the outlook for inflation is moderate, but relevant departments need to pay attention to signs that rising factory prices will lead to rising consumer prices.
Zhu Min said, "This is the key issue."
"I think the Chinese economy has clearly shown resilience and the first successful economic transformation, shifting from a focus on manufacturing and exports to the service industry."
Entering this week, the yuan's gains have accelerated Slow down, can the subsequent appreciation of the RMB continue?
In this regard, industry insiders believe that after the U.S. dollar index fell below important support, rigid demand for foreign exchange settlement before the Spring Festival and wait-and-see orders for foreign exchange purchases, there is still room for the RMB to continue to appreciate in the short term.
"From the perspective of the main body's behavior, the driving force for the appreciation of the RMB exchange rate lies in three points: First, some exchange settlement orders pending before the Spring Festival have formed "rigid demand", which constitutes the momentum for the short-term appreciation of the RMB; second, the U.S. dollar index and the U.S. dollar against the people After the RMB fell below important support, foreign exchange purchase orders tended to remain on the sidelines in the short term; third, entities that are not in a hurry to settle foreign exchange before the Spring Festival may wait for the settlement of foreign exchange in the appreciation band of the U.S. dollar against the RMB after the holiday, which will suppress the appreciation momentum of the U.S. dollar against the RMB, especially The early settlement area is concentrated,” Xingye Research said.
Is speculative buying making a comeback?
According to a Hong Kong bank foreign exchange trader, the biggest reason why the recent increase in the RMB exchange rate has outperformed the decline in the US dollar is that after the European and Japanese central banks successively released signals to tighten monetary policy, the effect of the US dollar's hawkish interest rate hikes was further weakened. Sooner or later, the interest rate advantage will rise and fall back.
However, the market’s bearish sentiment towards the US dollar may further evolve into a speculative buying boom in the RMB market.
"Some speculative capital believes that the U.S. dollar index will soon fall below 90, and then test the 87-88 line, so they are betting that the RMB exchange rate will increase by about 2,000 basis points." Marc Chandler revealed. While these speculative capitals were buying up the RMB in the foreign exchange market, they also raised the execution price of six-month and 12-month RMB swap transactions from the original 6.5-6.6 to 6.3-6.4.
However, there is still a high chance that the US dollar will bottom out and rebound in the future.
"These speculative capitals have their own winning tricks." Marc Chandler revealed that they use the increase in RMB volatility to launch new arbitrage transactions. As the hidden volatility of the RMB exchange rate against the US dollar increases to 4%-5%, they are trading at low prices. Buying the RMB at the bottom and waiting for it to rise will make the RMB tend to rise more easily than fall, amplifying the rise of the RMB during the decline of the U.S. dollar.
Liang Jinsong: It is not advisable to realize full convertibility of the RMB too early
html On January 15-16, the Asian Financial Forum jointly organized by the Hong Kong SAR Government and the Hong Kong Trade Development Council will be held at the Hong Kong Convention and Exhibition Center. Liang Jinsong, chairman and chief executive of Nan Fung Group, said at the forum that the internationalization of the RMB has strategic significance and can cooperate with China's overall economic globalization. "If we need to use other currencies to make investments, this will be a national security issue in the long run."(Speech by Liang Jinsong, Chairman and CEO of Nan Fung Group)
However, Liang Jinsong also said that it is not advisable to realize the full use of the RMB too early. Free convertibility, especially free convertibility of capital. Because the rules of the international market are generally set by the Western market, and now the technology is very advanced. It may be possible to transfer from one asset to another asset or from this place to another place in one second. Therefore, the market volatility Very big.
It is a high probability that the RMB exchange rate will continue to stabilize in 2018.
In 2018, China will still face a certain degree of economic downward pressure and external financial risks, and in a situation where internal financial risks are still relatively large, there is the possibility of vicious linkage between internal and external financial risks. Therefore, it is necessary to improve the current exchange rate policy and monetary policy coordination mechanism in 2018: on the one hand, it is necessary to maintain tight cross-border capital flow management and prevent the impact of large-scale cross-border capital flows; on the other hand, it is necessary to improve the RMB exchange rate formation mechanism , making it more flexible to ensure full independence and effectiveness of monetary policy.
It is worth noting that at the beginning of 2018, it was reported that the central bank readjusted the central parity formation mechanism of the RMB against the US dollar and adjusted the coefficient of the "countercyclical factor" to 0, but still retained the regulatory factor. This adjustment is mainly due to the recent rapid appreciation of the RMB against the US dollar, and the central bank's motivation to maintain exchange rate stability is still very obvious. The central bank should appropriately increase the proportion of closing exchange rate (market supply and demand) factors in the RMB exchange rate formation mechanism so that monetary policy no longer pays excessive attention to exchange rate factors. Only in this way can the "hands and feet" of monetary policy be liberated to better achieve the goal of economic stability.
Regarding the current rise in the RMB exchange rate, State Administration of Foreign Exchange spokesperson and Director of the Department of International Balance of Payments Wang Chunying recently stated that the recent appreciation of the RMB is related to internal improvement and the weakening of the U.S. dollar. Wang Chunying's explanation is consistent with the market's judgment. Market analysts believe that my country's trade surplus continues to expand and tight domestic funds encourage companies to increase overseas liabilities and slow down the purchase of overseas assets. Coupled with the weakness of the US dollar, the RMB exchange rate is once again facing appreciation pressure.
Regarding the RMB exchange rate, market participants currently generally believe that the recent unexpected weakness of the U.S. dollar index is the main reason for the appreciation of emerging market currencies, including the RMB. Of course, China's economy is stable and improving, and its monetary policy is prudent and neutral, which also provides fundamental support for the stabilization of the RMB exchange rate.
Some insiders pointed out that in the context of my country's strong economic growth resilience and the marginal tightening of monetary policy, it is a high probability event that the RMB exchange rate will continue to stabilize. This will provide good support for risky assets, especially equity assets. The RMB exchange rate The improvement in the overall domestic liquidity environment brought about by stabilization will also help the bond market recover. Looking further, as the RMB exchange rate truly realizes two-way floating, the enthusiasm of overseas capital to allocate Chinese bond and stock assets will tend to increase.
(Risk warning: Investment is risky, so be careful when choosing. The content of the above article does not constitute any investment advice.)
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