Focus | What happens?The RMB exchange rate hit a new high for more than three years!Will the two-way exchange rate fluctuations be broken by the end of the year?

   On the morning of December 8, the onshore and offshore renminbi surged together, both hitting their May highs, a new high since May 2018.Why is the yuan rate so strong?How to view the future trend?The yuan has appreciated against the dollar for three consecutive months since September.Since this year, the RMB exchange rate has generally continued its appreciation momentum since June 2020.Statistics show that as of 10 points on December 8, the onshore RMB against the US dollar spot exchange rate rose 2.85% this year, while the US dollar index rose 6.88% in the same period.Under the background of the strong dollar exchange rate, the RMB exchange rate bucked the trend out of the independent trend.As of December 3, the CFETS RMB exchange rate index, which reflects the weighted average exchange rate change of the yuan against a basket of currencies, was reported at 102.66, at an absolute high since December 2015, and appreciated 8.25% from the end of 2020. Dip plug, Chip Carrier Socket and green driveway reflectors should be noted.

       Zhang Yu, chief macro analyst of Huachuang Securities, said that since September 2021, the RMB exchange rate has significantly deviated from the dollar index, the rebound of the dollar index does not depreciate but rise, and the basket of RMB exchange rate index is at a strong level.
The People's Bank of China announced on December 6 that it will fully cut the reserve requirement ratio by 0.5 percentage points on December 15, and is expected to release about 12,000 yuan of long-term funds.It is generally believed that the release of large liquidity will put pressure on the local currency exchange rate through the interest rate mechanism.However, the announcement of the RRR cut did not affect the strong performance of the RMB exchange rate.Since December 7, the RMB exchange rate has been characterized by accelerated appreciation.
Why is it so strong?Why can the RMB exchange rate get out of the independent market?The market consensus has made the RMB exchange rate remain basically stable by promoting steady economic operation, rapid growth of foreign capital inflow, and steady monetary policy.As for the RRR cut, the relevant person in charge of the People's Bank of China stressed that the orientation of prudent monetary policy has not changed, and the RRR cut is a routine operation of monetary policy.The People's Bank of China adheres to the normal monetary policy, maintains the continuity, stability and sustainability of policies, does not flood irrigation, and will create an appropriate monetary and financial environment for high-quality development and supply-side structural reform.The short-term RMB exchange rate remains strong, paying close attention to the central bank's attitude changes  A foreign exchange trader of a joint-stock bank in central China said that the foreign exchange exchange at the end of the year is active, the foreign exchange of large banks decreased significantly, it is expected that the short-term RMB exchange rate performance is still relatively strong, should pay close attention to the attitude of the central bank and the inhibitory role of important technical passes on the exchange rate.However, he also pointed out that the central bank still has sufficient tools to keep the yuan exchange rate in a reasonable equilibrium range, but now observing, the central bank prefers to let market forces work on the RMB exchange rate, or intentionally enhance its flexibility.In mid-November, the national foreign exchange market self-discipline mechanism conference has pointed out that the current global economic and financial situation is complex and changeable, the main economy central bank monetary policy began to adjust, affect the exchange rate, the future RMB exchange rate may be appreciation, may depreciate, two-way fluctuations is normal, reasonable balance is the goal, deviation is proportional to the correction force.
The crowding effect of the foreign exchange settlement channel may appear at the end of the year  Galaxy futures macro researcher said that the recent strong trend of the RMB exchange rate is because of the crowded effect of foreign exchange settlement channels before the end of the year.In the early stage, the RMB exchange rate was strong, and foreign exchange income enterprises are reluctant to sell foreign exchange to banks at low prices, but hope to sell foreign exchange to banks at higher exchange rates, that is, reluctant to sell or sell with foreign exchange.However, when the RMB exchange rate remains strong before the end of the year, it is easy to cause the crowding effect of the exchange settlement channel, and the crowding effect of the exchange settlement channel will further promote the RMB exchange rate further higher, and the exchange rate risk will appear and caused by foreign exchange income enterprises such as export.Market participants pointed out that historically, at the end of the year, due to the exchange settlement of export enterprises, the RMB exchange rate performed strong in most of the time.The possibility of the crowding effect of foreign exchange settlement channels may increase this year.Two-way fluctuations are the big trend  Market participants pointed out that the recently released domestic export data maintained a high growth rate, although the trade surplus is lower than expected, but still maintained at a high level, supporting the strong performance of the RMB.Short-term exports will still support the renminbi, which is likely to fall back next year.Gao Weidong, chief macro economist at Everbright Securities, pointed out that as the epidemic gradually reduces the restrictions on the supply chain, the growth trend of domestic export growth is likely to slow down, and the contraction of the trade surplus will reduce the demand for foreign exchange settlement and sale, and thus weaken the support for the RMB exchange rate at the level of supply and demand.There are also insiders inside course of study that the recent appreciation of the RMB exchange rate is more affected by seasonal factors, can not make a linear extrapolation of the short-term trend.In fact, in recent years, the actual market performance has repeatedly proved that two-way fluctuations are the general trend of the RMB exchange rate operation.Industry insiders believe that the future RMB exchange rate will remain relatively stable at a reasonable and balanced level, and maintain the basic pattern of two-way floating.But the two-way range of the yuan is likely to be wider than this year.


Post time: Dec-13-2021