Recently, the three major U.S. stock indexes fell by more than 3%, and the yields of US dollar and US bonds rose. The RMB fell in the night trading. As of last Friday's closing, the US dollar/offshore RMB quoted at 6.8949, just one step away from 6.9.

Recently, the three major U.S. stock indexes fell by more than 3%, and the yields of US dollar and US bonds rose. The RMB fell in the night trading. As of the close of last Friday, the US dollar/ offshore RMB was quoted at 6.8949, just one step away from 6.9. USD index was 108.76. In the short term, the momentum of a strong dollar will be difficult to weaken, and the RMB is facing certain pressure in the near future.

In the past two weeks, the US dollar index has been unstoppable. Last week, it broke through the nearly 20-year high of 109 on the 23rd after more than a month. After the unexpected rate cut of the People's Bank of China on August 15, the RMB exchange rate that had been sideways for a long time also fell below the 6.8 resistance level, heading towards the 6.9 mark, with a two-week decline approaching 1,500 points.

Will the RMB exchange rate against the US dollar "break 7"?

As it is expected that the Federal Reserve will raise interest rates significantly, my country's foreign exchange market is still facing pressure to strengthen the US dollar. At the same time, it can be inferred from the recent weak economic data that the pressure on my country's RMB depreciation still objectively exists. After the Federal Reserve raises interest rates, the RMB exchange rate against the US dollar will face greater pressure of depreciation, and the domestic currency manipulation space will become smaller, which will have a greater impact on the domestic stock market and real estate market.

For my country's energy and food industries, since my country needs to import hundreds of billions of dollars of raw materials and food every year, this will increase the import costs of domestic enterprises and increase domestic inflation pressure.

A large state-owned bank foreign exchange trader said recently that the depreciation was mainly affected by economic data such as interest rate cuts and social financing . "The offshore RMB depreciation is relatively strong, the pressure of overseas depreciation is greater, the transaction is stronger, and domestic demand is greater. After the RMB depreciation, the foreign exchange settlement volume is not small." Most points are forecast between 6.7 and 6.95.

From a market perspective, the continued depreciation of the RMB will lead to a decline in the relative return rate of RMB assets. From the perspective of export companies, as far as the current exchange rate level is concerned, the depreciation of the RMB is conducive to my country's exports and to a certain extent is also conducive to settlement. In the future, the RMB will continue to remain stable. From this point of view, the probability of the RMB exchange rate against the US dollar "breaking 7".

Strong US dollar is one of the key factors driving the decline of the RMB exchange rate. Wang Youxin said that the US dollar index is expected to be at the bottom line, and the possibility of continuing to rise sharply is low. The Fed's interest rate hike has reached the second half of the year. It is expected that after a sharp interest rate hike in September, the process of interest rate hikes in the fourth quarter will slow down significantly, and interest rates will return to the normalized level of 25 basis points.

"The downward pressure on the US economy is gradually increasing, and economic indicators such as production, consumption, and investment are all showing a downward trend. It is expected that the US dollar index will gradually fall from a high level after September." However, Wang Youxin also reminded that considering the more severe inflation challenges and the threat of economic recession, under the influence of risk aversion sentiment, the US dollar index is expected to experience a limited pullback in the fourth quarter.

CITIC Securities Chief economist clearly believes that the current trade surplus remains high, and the inflow of foreign direct investment (FDI) has increased year-on-year. Therefore, the trend of the US dollar index has caused certain disturbances to the RMB in the short term. Overall, the balance of payments is in equilibrium in 2022, and the RMB may continue to fluctuate.

Chief macro analyst of Oriental Jincheng Wang Qing believes that as the domestic economic recovery momentum increases, my country's international balance of payments is expected to maintain a surplus trend, and it is difficult to effectively gather the expectations of RMB depreciation. 6.9 interval.

Foreign trade situation determines the exchange rate toward

So far this year, the RMB has performed relatively well in global currencies. Media data shows that the US dollar index rose nearly 14%, the euro and pound fell by more than 12%, the Japanese yen fell by more than 15%, and the RMB fell by more than 15%. The exchange rate against the US dollar is about 8%, significantly lower than other currencies.

looks at overseas markets. As global energy prices fall, U.S. inflation may further fall, while the U.S. dollar index may remain strong. US monetary policy tightening gradually enters the second half of the year.

Looking at the foreign exchange trends of overseas countries, the euro fell below parity against the US dollar again, and the market's expectations of a slowdown in interest rate hikes began to cool down. Manufacturing in France and Italy fell sharply; in addition to the euro, the pound also showed a downward trend against the dollar.According to a recent report by Bank of England , the UK economy will fall into a recession of more than a year in the fourth quarter; the yen is even weaker. On August 22, U.S. Treasury yields rose to 136.43, while the weekly increase will exceed 2%, the best single-week performance since June 10.

G10 currency weakness also pushed up the US dollar index. The euro and yen are likely to continue to be weak in the future. Among them, the weakening of the euro has the greatest impact, accounting for nearly 60% of the US dollar index. The current euro-USD exchange rate is 0.9964, continuing to fall below the parity of 1:1. The eurozone facing a severe energy crisis is likely to fall into a deep recession.

On the other hand, in my country, Barclays said that the future trade situation will still be the key to the direction of the RMB. The trend of the RMB depends on changes in exports. Recently, it is expected that the US dollar will remain at 6.9 against the RMB in the third quarter and may rebound to 6.8 by the end of the year. Since the current internal and external environment is different from the first half of the year, it is expected that the RMB exchange rate will not depreciate in the first half of the year.

In addition, it is worth noting that although the RMB exchange rate against the US dollar is under pressure compared to the euro, its overall performance is relatively stable and resilient. Wind data shows that between August 11 and August 24, the US dollar index rose 3.25%, while the euro fell 3.21% against the US dollar, while the onshore RMB fell 3.21% against the US dollar. The US dollar fell 1.98%, and the offshore yuan fell against the US dollar. 2.29%.

Compared with the euro zone, under the new normal of the flexibility and increasing fluctuation of the two-way fluctuation of the RMB exchange rate, many positive factors behind it will exist for a long time. An effective balance between successful practice and task.

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