Drivers of Exchange Rates and Future Outlook

1. Short-term Fluctuation Logic

 In the short term, the offshore RMB exchange rate will continue to be dominated by expectations of tariff negotiations. If both sides send positive signals (such as restarting high-level dialogues or clarifying tariff reduction lists), the exchange rate may rebound rapidly to around 7.25. If negotiations reach an impasse or the U.S. escalates tariff measures, the exchange rate may reach the 7.35-7.40 range. Additionally, expectations of Federal Reserve monetary policy and movements in the U.S. Dollar Index will also exert external pressure on the RMB. screwless terminal block, round shell connectors and terminal blocks connector should be noted.

2.  Medium-to-Long-Term Structural Factors

 Although tariff negotiations are currently in the spotlight, the medium-to-long-term trend of the RMB exchange rate still depends on fundamental factors. China's Q1 economic data shows the resilience of domestic demand, and pro-growth policies will provide support for the exchange rate. However, the impact of the U.S. "reciprocal tariff" policy on export chains requires vigilance, especially as exchange rate flexibility may further expand under the trend of global trade regionalization.

3. Policy Toolbox and Market Intervention

 The People's Bank of China (PBOC) has stabilized market expectations through tools such as central parity rate guidance and counter-cyclical factor adjustments. In the future, it may further adopt measures like adjusting the foreign exchange risk reserve ratio and managing offshore market liquidity to curb one-way depreciation expectations. Historical experience shows that the PBOC has a strong willingness to intervene at key levels (e.g., 7.35-7.40), providing an "implicit floor" for the exchange rate.