RMB Devaluation Is A Double-Edged Sword For Exports.

Last week's 4 trading days (from December 1st to 4th), the RMB against the dollar spot market for 4 consecutive trading days touched down, becoming a hot topic for a while.

In fact, the change of the RMB's trend is not an unexpected result.

Previously, there was a strong expectation of depreciation in the market.

Last month, Zhou Xiaochuan, governor of the central bank, said that China's export could not be ruled out through the devaluation of the renminbi.

Let's look at the market quotation of offshore RMB non forward contract (NDF), which has dropped to 7.2 to 7.3, giving arbitrage space to forward trading.

Against this background, the export enterprises' willingness to settle foreign exchange is weakened, the strength of US dollar selling power is reduced, and some foreign enterprises buy US dollars in the territory and sell US dollars to the NDF market, resulting in an increase in US dollar buying.

What's more, the US dollar has appreciated against other currencies recently, and only the "stalemate" against the renminbi is there.

On Monday, the central bank announced that the central parity of RMB against the US dollar was 6.8505, which changed considerably compared with 6.8349 of the previous trading day.

After the 4 trading days hit the limit, the devaluation of the renminbi was gaining momentum.

On Friday, the central parity of RMB against the US dollar rose by 20 basis points over the previous trading day; Commerce Minister Chen Deming said on the 4 day that the recent fluctuations in the renminbi against the US dollar were "completely normal", and China did not rely on devaluation to boost exports.

However, market expectations for depreciation are still strong.

The newly released "nine financial nations" will give the market new associations with exchange rate movements.

In the "nine financial states", we put forward that we should comprehensively use the deposit reserve ratio, interest rate, exchange rate and other means to maintain the full supply of liquidity in the banking system.

Some bank experts pointed out that the direction of exchange rate increase or decrease is not clear. Linking the "exchange rate changes" and "promoting growth" is the spiritual essence of the nine financial nations.

For the expectation of RMB devaluation, some people compare it with the increase of export tax rebates.

Wang Qian, chief analyst of the first textile network, recently proposed that the depreciation of RMB is the best choice in many alternative policies to stimulate exports.

He believes that the effect of RMB depreciation by 1% is equivalent to an increase of 1.5% to 2% of the export tax rebate rate.

A foreign trade company in Shanghai said that even if the yuan depreciated slightly, it would be better than the US dollar's continued appreciation.

RMB appreciation has exceeded 20% since the reform, which has brought great pressure to export enterprises.

The head of the foreign trade enterprise said, "the appreciation of the renminbi has eaten too many corporate profits, and if the rate of appreciation is as fast as the beginning of the year, the bankrupt foreign trade enterprises are bound to be more".

In his view, the acceleration in the first half of the year was aimed at dealing with high inflation. Now inflation pressure is decreasing, and exchange rate policy should take care of the feelings of enterprises.

What's more, countries compete against the US dollar, and the India rupee has depreciated more than 15% in the past 6 months. In the Thai baht year, the total number of shares has been around 17%. If the RMB continues to be strong, the competitiveness of export enterprises will be weakened.

In terms of textile exports, China and India are the two largest exporters, and the influence of currency strength is not the same.

It is undeniable that even if we look at the RMB exchange rate, we do not think there is much room for depreciation.

One of the factors that can not be ignored is that the depreciation of the RMB will encounter greater international pressure.

Paulson, the US Treasury Secretary, came to China last week to demand further appreciation of the renminbi.

At the same time, some experts have different views on devaluation of the renminbi.

Sun Lijian, vice president of Economics School of Fudan University, said in his blog that the price of RMB should not be adjusted too much, otherwise it would cause more international friction and affect normal exports.

The excessive adjustment of RMB prices will also result in the fact that there is no substantial improvement in the exchange rate risk control ability of enterprises, resulting in the lack of competitiveness in the international market.

Liu Yuhui, director of the China economic evaluation center of the Financial Research Institute of the Chinese Academy of Social Sciences, told reporters that the depreciation of the RMB will lead to the rise of trade protectionism.

If trade protectionism is more serious, China will not get much cheaper, but it will be damaged.

It can be seen that devaluation of the renminbi does not necessarily require excessive interpretation.

The outbreak of the overseas financial crisis caused the export enterprises to "leak out for a rainy day". A large number of enterprises were forced to stop production, lay off workers or even fail.

At present, there is a sharp contraction in overseas demand, and the slight depreciation of the renminbi has limited effect on the "rescue" of enterprises.