Data authorized by the People's Bank of China to the China Foreign Exchange Trading Center on the 27th showed that the RMB mid-price against the US dollar was 7.0722, a 424-point cut. On the 26th, the RMB mid-price against the US dollar was lowered by 378 basis points to 7.0298.

China News Service, September 27th. Data from the People's Bank of China authorized the China Foreign Exchange Trading Center on the 27th showed that the central price of the RMB against the US dollar was 7.0722, a 424-point cut.

Image source: China Foreign Exchange Trading Center website

In addition, the US dollar index 26 rose significantly. The dollar index, which measures the dollar against six major currencies, rose 0.81% on the day and closed at 114.1030 at the end of the foreign exchange market.

htmlOn 26, the RMB mid-price against the US dollar was lowered by 378 basis points to 7.0298. On the same day, in order to stabilize foreign exchange market expectations and strengthen macro-prudential management , People's Bank of China decided to increase the foreign exchange risk reserve ratio of forward foreign exchange sales business from 0 to 20% from September 28, 2022.

In this regard, China Securities global chief economist Guan Tao pointed out that from previous experience, raising the foreign exchange risk reserve ratio is an important and effective macro-prudential measure to deal with exchange rate fluctuations. This restart will help regulate forward foreign exchange purchase demand, curb the pro-cyclical herd effect, and promote the stability of the RMB exchange rate.

Before this, the RMB exchange rate against the US dollar began to fall sharply from August 15, and fell below the 6.94 mark during the trading session on September 5. Against this background, the central bank announced in the evening that starting from September 15, 2022, the reserve ratio of financial institutions' foreign exchange deposit will be lowered by 2 percentage points, that is, the reserve ratio of foreign exchange deposits has been lowered from 8% to 6%.

Liu Guoqiang, deputy governor of the People's Bank of China, said that the long-term trend of the RMB should be clear, and the world's recognition of the RMB will continue to increase in the future, which is a long-term trend. However, two-way fluctuations in the short term are a normal state, and there will be no " unilateral market ", but the exchange rate point is not accurate, so don't bet on a certain point.

Guohai Securities previously pointed out that the recent depreciation of the RMB is mainly due to the rapid rise of the US dollar index, and the RMB has not depreciated compared with other packages of currencies, and has even appreciated slightly. At the same time, recent exchange rate fluctuations have relatively limited impact on my country's exports in the short term. (China Business Network APP)