Go high at 6.3! The RMB exchange rate is back to its three – year high!

In March this year, the onshore RMB once reached a phased low of 6.57, then did not have the settlement of foreign traders, now I am afraid to regret are green. Din rail terminal blocks, CPU connector and reflectors safety should be noted.

Since April, the dollar index has weakened by 2. 1% , and the RMB has continued to strengthen against the dollar, up 2. 18% onshore and pulling more than 1 400 points; the offshore RMB has risen more than 1500 points, or 2.73% .

On May 26, the central parity rate of the RMB rate reported $ 1 to RMB 6.4099, up 184 basis points from the previous trading day, hitting a nearly three – year high, step by step away from the 6.3 yuan era.

On the same day, the onshore RMB, offshore RMB against the dollar exchange rate volatility rose, both broke the 6.4 yuan mark, came to the 6.3 yuan era. A year ago, the yuan was still in the 7.1 era, rising by more than 7, 100 basis points in a year.

Such a rise is, of course, a great good for import enterprises, especially in the current some commodity prices continue to rise sharply, the appreciation of the RMB will also reduce the pressure brought by rising commodity prices.

But for our export enterprises, when this big mountain is under pressure, the business has become more difficult to do.

In view of such an obvious appreciation trend, the Financial Commission and the People’s Bank of China have voiced intensively recently, setting the tone for the trend of the RMB exchange rate.

On May 21, the 51 st meeting held by the Financial Stability and Development Commission of the State Council stressed, when studying and deploying key work in the next stage, to further promote the marketization reform of interest rate and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

On May 23, Liu Guoqiang, vice governor of the People’s Bank of China, said on the RMB exchange rate that since this year, the RMB exchange rate has risen and fluctuated in both directions, which has remained basically stable at a reasonable and balanced level. At present, China’s foreign exchange market is independently balanced, the RMB exchange rate is determined by the market, and the exchange rate expectation is stable. In the future, the trend of the RMB exchange rate will continue to depend on market supply and demand and changes in the international financial market, and two – way fluctuations will become normal.

Recently, it is argued that the input inflationary pressure of commodity prices can be hedge by RMB appreciation. There are also comments that the central bank will eventually abandon the management of the exchange rate, and the RMB will continue to appreciate against the dollar in the medium and long term.

The central mother’s subsequent response showed that it was unlikely to change its RMB exchange rate system in the short term. At present, it is not a priority for regulators to alleviate the impact of international rising commodity prices on domestic prices by promoting the appreciation of the RMB exchange rate.

It is of more important significance to maintain the normal two – way fluctuations of the RMB exchange rate along with the market supply and demand and the changes of the international financial market (including the trend of the US dollar), and to avoid the aggregation of unilateral market expectations, to maintain the order of the RMB market and consolidate financial security.
At present, all institutions have forecast the future RMB trend as follows:

UBS Wealth Management released a report Monday that the bank expects rising pressure in 2022; it cut its late September forecast to 6. 3 from 6.35 and to 6.40 for the first quarter of next year. In addition, the bank set a target of 6. 45 next June.

CITIC Securities believes that combined with China’s strong exports, the low actual interest rate of the United States and the overall pigeon attitude of the Fed, the RMB exchange rate still has room for appreciation, the US dollar against the RMB exchange rate down or hit 6.2.

Tao Chuan, a macro analyst at Soochow Securities, pointed out that the recent market positive sentiment on the US economy showed short – term peak signs, coupled with loose dollar liquidity, higher inflation of US debt yields under the lack of further upward momentum. In addition, the marginal improvement in the epidemic in Europe has also led to the weakening of the dollar index. He said the recent appreciation of the RMB is less than mainstream currencies such as the euro, and is expected to slow down in the future, with its resistance point from 6.30 to 6.35 against the dollar.

Bank of Communications financial research center chief researcher Tang Jianwei analysis, due to the RMB exchange rate appreciation and depreciation factors exist at the same time, is expected to have difficult trend appreciation or depreciation, the dollar against the yuan this year rose 6 or degrade 7 probability is very small, it is expected that the RMB exchange rate will still maintain the characteristics of two – way fluctuations.

For us foreign trade people, the general trend of two – way exchange rate fluctuations is always better than unilateral appreciation. At present, the main way to deal with the risk of exchange rate fluctuations is nothing more than:

1. imported part of the raw materials to hedge losses;

2. Using cross – border RMB for foreign exchange collection;

3. controls risk through foreign exchange derivatives tools.

Post time: May-27-2021