On the morning of December 5, the offshore RMB rose by more than 300 points against the US dollar, regaining the "7" mark and returning to the "6 era" for the first time since September 21. As of press time of the "Daily Economic News" reporter, the offshore RMB was trading at 6.

Every reporter: Zhao Jingzhi Every editor: Chen Xu

In the morning of December 5, offshore RMB rose by more than 300 points against the US dollar, regaining the "7" mark and returning to the "6 era". This also became the first time since September 21.

As of the press time of the " Daily Economic News " reporter, the offshore RMB was trading at 6.9707 against the US dollar, having risen above 6.98.

The sharp rise in the RMB has been a highlight in the recent foreign exchange market . Since November 29, the RMB has risen against the US dollar for five consecutive days, with a total increase of more than 2,500 points as of press time. In addition, the onshore RMB has now recovered the "7" mark, rising by about 600 points from the opening at 9:30 am to the time of writing. Experts interviewed by

told reporters that the recent sharp rebound of the RMB is mainly due to two reasons: first, the optimization of domestic epidemic prevention and control policies; second, the increase in expectations that the US dollar will slow down the pace of interest rate in December.

The recent trend of RMB against the US dollar

The RMB rose above the "7" mark

On December 5, the offshore RMB exchange rate against the US dollar, which more reflected the sentiment of international investors, rose and has exceeded the "7" mark, rising to a maximum of 6.9636.

At the same time, the onshore RMB rose rapidly as soon as the market opened. It is currently quoted at 6.9745, rising by more than 600 points.

According to the reporter of "Daily Economic News", the RMB has risen sharply against the US dollar since November. The offshore RMB has risen by about 3,500 points since November, and the onshore RMB has also risen by more than 3,000 points against the US dollar.

Wang Qing of the Research and Development Department of Oriental Jincheng said that the recent sharp rebound of the RMB is mainly due to two reasons:

First, based on recent trends in US inflation and employment data, the market is increasingly expecting the Fed to slow down the pace of interest rate hikes in December. This has led to a sharp decline in the recent US dollar index , and the parity effect will push up the RMB exchange rate against the US dollar.

Second, since the end of November, Beijing, Guangzhou and other places have optimized epidemic prevention and control policies including nucleic acid testing, isolation measures, etc., which has effectively boosted market confidence in the next domestic economic rebound.

"We believe that the latter is the main reason why the RMB exchange rate has risen sharply in recent trading days." Wang Qing said.

It is worth noting that the end of the year is the peak period for foreign exchange settlement demand, which will have a certain supporting effect on the RMB exchange rate. "But this is a seasonal phenomenon and is not an unexpected factor. What determines the direction of the foreign exchange market is mainly the market's expected difference." Wang Qing said that currently is a sensitive period for adjustment of epidemic prevention and control policies, and the market's expectations for the prospects of domestic economic recovery and changes in the Federal Reserve's monetary policy will play a more important role in the RMB exchange rate.

"The short-term bullish sentiment on the RMB continues to dominate." Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, said in an interview with a reporter from the "Daily Economic News" on WeChat that as epidemic prevention and control measures continue to be optimized and policies to stabilize the property market continue to be implemented, investors are more optimistic about the domestic economic prospects. In addition, the market expects the Federal Reserve to enter the end of its interest rate hike cycle and the pace of interest rate hikes will slow down, leading to a sharp decline in the U.S. dollar recently. At the same time, market concerns about the U.S. economic recession have also intensified.

Zhou Maohua believes that in the short term, internal and external factors will continue to be beneficial to the renminbi, and the market's bullish sentiment on the renminbi is expected to dominate. However, we need to pay attention to short-term fluctuations, mainly because the work of controlling inflation in Europe and the United States is far from complete, the risk of overseas stagflation lingers, the overall financial environment is tightening, and there are still many global uncertainties. Investors need to be wary of short-term market fluctuation risks.

is expected to show a two-way wide fluctuation pattern in the later period

Since the middle of last year, the US dollar has been in a super strong cycle, with the US dollar index soaring from a low of 90 in May 2021 to a high of 114 at the end of September. However, since November, the U.S. dollar index has begun to decline. As of press time, the U.S. dollar index is 104.2690, down about 9% from the high of 114.7861 in September.

"Overall, judging from the trend, the global external environment will still be very complicated next year." Zhou Maohua said that the global economy will slow down next year, and the inflation faced by Europe and the United States will be more difficult, so the global financial environment will tighten. At the same time, the conflict between Russia and Ukraine continues, adding to the uncertainty of risks. “The U.S. dollar will maintain high interest rates for a period of time next year."

Zhou Maohua believes that my country's economy is currently "stable" in many aspects: stable international balance of payments, stable inflation, and stable monetary policy. "From a comprehensive internal and external perspective, the RMB exchange rate next year is expected to be overall stable and fluctuate in both directions near the equilibrium level." "

At present, with the continuous introduction of optimization measures for epidemic prevention and control and the full force of the "three arrows" of financial support for real estate, the foreign exchange market's expectations for the prospects for domestic economic recovery are improving.

Wang Qing predicts that, driven by expectations of improving domestic fundamentals, the resilience of the RMB is expected to be substantially enhanced. At the same time, driven by U.S. inflation and employment data, the Fed's interest rate hike in December is expected to narrow to about 50 basis points, and the current U.S. dollar index is basically at Top, it is easy to get off but hard to get up in the later stage. From this point of view, it is more likely that the RMB exchange rate against the US dollar will continue to rise in December. The RMB has basically achieved dynamic stabilization, and will see more two-way wide fluctuations in the later period.

"We also believe that factors such as weaker export data in the short term and the narrowing of the inversion of interest rates between China and the United States will also have a certain impact on the foreign exchange market. However, the prospects for domestic economic recovery and the direction of U.S. monetary policy will be the dominant factors that determine the strength of the RMB exchange rate in the future. "Wang Qing said.

Enterprises need to return to exchange rate neutral

"The sharp rebound in the RMB exchange rate will, on the one hand, ease the pressure of capital outflows in the domestic capital market, reduce the import costs of enterprises, and the RMB price for individuals purchasing overseas goods will also fall; on the other hand, this will also compress the exchange earnings of export enterprises and reduce the cost of individuals purchasing foreign exchange. "When talking about the appreciation of the RMB, Wang Qing said.

Reporters have noticed that the recent exchange rate fluctuations of the RMB against the US dollar are still relatively violent. According to statistics, since the end of October, the offshore RMB against the US dollar has risen by about a thousand points in a single day many times.

For example, on October 26, the offshore RMB against the US dollar rose by 1,264 points; 11 On November 4, the offshore RMB rose by 1,541 points against the U.S. dollar; on November 10, the offshore RMB rose by 1,192 points against the U.S. dollar; on November 29, the offshore RMB rose by 1,075 points against the U.S. dollar; on November 30, the offshore RMB rose by 941 points against the U.S. dollar.

"On the whole, the current RMB exchange rate is still in a state of wide fluctuation. For foreign trade companies, it is extremely difficult to accurately judge the direction of exchange rates. "Wang Qing said that both importing and exporting companies must adhere to the principle of financial neutrality and try to use foreign exchange hedging tools such as forwards and options to manage exchange rate risks. Especially in the context of intensified foreign exchange market fluctuations currently and in the future, foreign exchange risk exposures can be appropriately reduced to avoid exchange rate fluctuations." Incurring losses due to "streaking", one must especially avoid unilateral bets. In addition, for foreign trade companies, using RMB for settlement as much as possible is also an effective way to avoid exchange rate risks.

"In the future, there will still be a complex and changeable environment, with many factors affecting the exchange rate, so the exchange rate faces relatively large fluctuations. Enterprises also need to return to exchange rate neutrality, lock in costs, and avoid losses caused by speculation." "Zhou Maohua said that in the context of the slowdown in global economic demand next year, the demand for foreign trade in some industries may be under pressure. In this case, the substitution of overseas orders has weakened, and the risk of global economic slowdown or recession has increased. Enterprises also need to improve quality and efficiency, and work more on the competitiveness of foreign trade.

Daily Economic News