Soaring by nearly 500 points! The renminbi surged into the sea once it rose above the 6.55 level and institutions continue to be bullish

Original title: nearly 500 points in flight! Renminbi has skyrocketed, offshore once soared above 6.55 level, institutions continue to be bullish … Experts remind: prevent abnormal cross-border capital fluctuations

Summary

[Surge quasi 500 punti! Il renminbi è balzato in mare una volta superato il livello di 6,55 e le istituzioni continuano ad essere rialziste]The continued appreciation of the renminbi has a combined effect of internal and external factors. Many analysts believe that the factors underpinning the RMB exchange rate strengthening early on will continue in the short term, which means that RMB should still remain strong. However, with the continued appreciation of the exchange rate, the continued influx of “hot money” triggered by it and its impact on the export industry has attracted more and more attention. (Securities Times Network)

November 9, offshoreRMBThe exchange rate against the US dollar once rose above the 6.55 level, continuing to hit a new high since June 2018.At 4.30pm, the onshore renminbi closed at 6.5728 against the US dollar, in 487 up from the previous trading dayBase pointThe offshore exchange rate of RMB against the US dollar also increased by more than 400 basis points to around 6.55.

Since the end of May this year,RMB exchange rateUp strongly. So far, the RMB exchange rate against the US dollar has appreciated nearly 8% from its lowest point in late May. Over the same period, the RMB against a basketcurrencyAlthough the appreciation rate of the renminbi is lower than that of the RMB against the US dollar, there is currently an appreciation of over 3%.

The continued appreciation of the RMB has a combined effect of internal and external factors. Many analysts believe that the factors supporting the RMB exchange rate strengthening early on will continue in the short term, which means that the RMB is expected to remain strong. However, as the exchange rate continues to appreciate, the “money” warm “that triggers continues to flow and theExportThe impact of the sector has also attracted increasing attention.

　　Vigorously discuss the “new cycle” of the RMB exchange rate

Due to the adequate prevention and control of the Chinese epidemic, the first recovery of the global economy and the weakening of the US dollar index itself, the RMB exchange rate has been volatile and has been increasing since the end of May. So far, the exchange rate of RMB against the US dollar has only appreciated in about 5 months Nearly 8%.

Many viewpoints believe that the current strong momentum of the RMB exchange rate is expected to continue in the short term, and research institutions have repeatedly raised the central level of the RMB exchange rate against the US dollar.Zheshang SecuritiesChief Economist Li Chao believes there is still room for RMB exchange rate appreciation in the future and continues to increase the exchange rate fluctuation center to 6.5 from the end of this year to next year, with a fluctuation range of 6.3-6.7. Wang Tao, China’s chief economist at UBS Securities, also predicted that the exchange rate of the RMB against the US dollar should increase slightly to around 6.5 before the end of the year.

According to Li Chao’s explanation, the appreciation of the RMB exchange rate is supported by two fundamental factors:First, the Chinese economy took the lead in recovery after the epidemic, and Chinese fundamentals are relatively dominant in the world; second, Chinese monetary policy has returned to normalization and marginal liquidity tightening in the near future since May.marketinterest rateOn the upside, the China-US interest rate spread widened.In addition, other marginal changes have occurred recently: First, China’s trade surplus continues to expand and the exchange rate is relatively stable.bankbetweenForeign currencyThe supply and demand structure of the RMB market has changed, pushing the RMB exchange rate up; secondly, the US general election entered into judicial controversy.GameThe repressive factors have relaxed and so on.

What is interesting is that although the market has a more unified view of the RMB exchange rate which continues to be strong in the short term, there are still differences in the forecast of the RMB exchange rate in the medium and long term. One view is that the RMB exchange rate has entered a new round of appreciation, while another view is that it is still difficult to end the new cycle.

　　Securities of Chinese tradersMacro HeadAnalystXie Yaxuan has said this since mid-March 2020MidlandThe Reserve’s unlimited quantitative easing monetary policy is a prerequisite for pushing the US dollar from a strong to a weak cycle. Over the next few years, the US dollar index will appear weak as a whole, which will put the RMB exchange rate back into an appreciation cycle.

　　Bank of China SecuritiesChief global economist Guan Tao believes the recent appreciation of the RMB exchange rate is a normal fluctuation.Whether it could enter a new cycle in the future depends on whether the fundamentals can show obvious sustainabilityOptimize. Factors affecting the appreciation and devaluation of the renminbi exist simultaneously, but different factors prevail at different times. In the process of appreciation and devaluation, there is a relationship between one and the other, especially after the exchange rate tends to be managed in equilibrium, the RMB exchange rate can open and close and fluctuate sharply.

　　Exchange rate appreciation and abroadCash flowMutual strengthening experts remind cross-border capital flows to respond proactively

While the major developed economies of the world maintain unlimited easinginterest rateOr negativeinterest rate, China and major developed economies maintained a relatively high interest rate differential, resulting in the recent attractiveness of RMB assets and the continued strengthening of the RMB exchange rate. The recent continued appreciation of the RMB exchange rate has also interacted with the continued inflow of cross-border capital. Data released by the State Foreign Exchange Administration showed that two-way capital flows into the securities market were more active in the third quarter.Investments abroadDomestic bonds exceeded $ 70 billion and China’s foreign bondsEquity investmentMore than 30 billion US dollars.

The appreciation of the renminbi and the inflow of international funds will mutually strengthen each other over a period of time and benefit the domestic capital market. However, there are also voices reminding that close attention must be paid to cross-border capital flows to avoid possible large fluctuations in cross-border capital flows in the future.

Xie Yaxuan said that if the US dollar continues to weaken in the future, it will bring many forms of continuityInternational capitalInflows, this requires from a macroprudential perspective, forward-looking research and an active response.The weak dollar cycle has done so.priceThe impact of the level is more expansive, making the economy hot andPrice levelThe possibility of an increase is greater, and monetary policy regulation needs to take this factor fully into account and be more forward-looking.Appreciation of the local currencyPressure, the central bank withdrewForeign exchange marketIn the case of normal intervention, it can only rely primarily on macroprudential policies and the coordination of international exchange rate policy to avoid interference with the implementation of monetary policy.

　　CITIC securitiesThe Deputy Director of the Institute clearly stated that from the current point of view, the trend of the renminbi is mainly influenced by the reciprocal forces between China and the United States, including the balance of payments outlook, the development of US fundamentals, the weakness medium term under the US dollar cycle and US elections. Political disturbances, the renminbi trend may show a strong overall characteristic. However, from a long-term perspective, on the one hand, if the US economy gradually recovers and moves towards recovery, the RMB exchange rate will still be under some pressure. On the other hand, from the point of view of the “double cycle”, the current account and the capital account still have to maintain an overall balance. The excessive strength of the RMB can put pressure on the checking account to some extent. Therefore, in the long run, the exchange rate of the RMB may not be excessive.

(Source: Securities Times Net)

(Responsible publisher: DF537)