The Stability Of RMB Exchange Rate Is The Main Trend This Year.

The stability of RMB exchange rate should be the general trend this year.

However, I still believe that the RMB should gradually change from the stability of the US dollar to the stability of the RMB exchange rate index.

This requires the central bank to launch the RMB exchange rate index compiled by our country as soon as possible.

Secondly, the central bank should adjust the exchange rate by adjusting interest rates just like Japan and the United States.

Since the beginning of this year, the appreciation of the renminbi has been expected to increase, and the central parity of the RMB exchange rate has risen second times in February 24th after the first round of from January 4th to 15th.

Compared with the beginning of this year, the RMB to us dollar exchange rate increased by 20 basis points this year.

However, I believe that the RMB exchange rate has not entered the appreciation channel.

This is mainly reflected in the stable fluctuation zone formed after the return of RMB to the US dollar in 2009, so far it has not been effectively cracked.

The highest point of the interval is 6.8201, still 62 basis points higher than the highest exchange rate this year in March 15th.

However, in the second half of this year, we will face a breakthrough in the direction of the rising rate since the beginning of this year.

However, the stable pattern of RMB will be hard to break.

The basis for RMB appreciation is not sufficient.

First, since last September, our government's understanding of the stability of the RMB exchange rate has deepened and its attitude is becoming clearer.

When President Hu Jintao met with us president Obama in New York in September 22, 2009, and when Premier Wen Jiabao met with the leaders of the "three carriages" of the euro group in Nanjing in November 29th, two leaders repeatedly pointed out: China has maintained the stability of the RMB exchange rate and made important contributions to world financial stability and economic development.

And reiterates that the Chinese government will continue to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

On January 28, 2010, Vice Premier Li Keqiang of the State Council, when attending the dialogue of famous entrepreneurs in Davos, also mentioned that China's domestic demand played a positive role in stabilizing and recovering the world economy, and the expansion of China's domestic demand was inseparable from China's economic, financial and RMB exchange rate stability.

Since then, foreign ministry spokesperson Ma Zhaoxu said in February 4th that the RMB exchange rate is approaching a reasonable equilibrium level from the perspective of balance of payments and foreign exchange market supply and demand.

Recently (March 14th), Wen Jiabao was very cautious at the meeting of Chinese and foreign journalists at the 3 session of the 11 National People's Congress. "I don't think the value of the renminbi has been underestimated."

This is the first time that the Chinese government has made a clear judgement of the RMB equilibrium exchange rate.

Second, during the financial crisis, our government correctly implemented the policy of expanding domestic demand and stabilizing exports.

In the current pformation of industrial structure, the government implements the policy of promoting the balanced development of imports and exports.

Therefore, the exchange rate should not and never become a policy tool for China's industrial restructuring.

In its February monetary policy report, the Bank of Japan pointed out that since the financial crisis, Japan's share of exports to Asian countries has risen from 41.1% before the crisis to 54.2%, while exports to the US and euro zone member countries have dropped from 46% to 28.6%.

Because the added value of products exported to Asian countries is low, and it is a public product, the adjustment of Japanese export structure will lead to the low level of domestic industrial structure.

Advocates of RMB appreciation advocate that China's export enterprises should be forced to shift to the domestic market by revaluation, so as to restore the so-called international economic balance.

But the consequences can only be: first, the specialized production capacity of enterprises is weakened, and the quality requirements of product management are reduced.

Secondly, it destroys the principles of foreign trade without borders and limits the free trade rights of Chinese enterprises in the international market.

Third, the central bank's interest rate hike this year will not affect the stability of the RMB exchange rate.

The advocator of RMB appreciation thinks that if the interest rate of RMB is higher than the interest rate of the US dollar, the appreciation of the RMB will only open up the space for the next increase in interest rate, that is, the exchange risk of the appreciation should be taken first, so as to avoid the risk of arbitrage of international capital that the interest rate may face in the future.

I think this view is not valid.

First of all, from the perspective of the cycle of interest rate policy of the central bank, the Federal Reserve and the people's Bank of China will soon embark on the interest rate increase cycle.

This situation is very similar to the situation in 1993-1994 years.

At that time, the central bank raised interest rates 8 months earlier than the Fed.

The former started in May 15, 1993 and the latter only raised interest rates in February 4, 1994.

China's 1 year deposit rate is 4.56 percentage points higher than that of the Fed Fund Rate (7.56% and 3% respectively) before raising interest rates.

However, in 2004, China's rate hike was 4 months behind the Fed.

However, this round of China's interest rate hike in 2004 has overlapped with the US Federal Reserve's interest rate cycle. Therefore, it can not serve as an analysis basis for the current round of us and China's interest rate increase policy.

Secondly, we can not deduce from the characteristics of the scale and flow direction of international capital in recent years that RMB interest rate increases will lead to massive influx of international capital.

Fourth, the Chinese government is actively advocating that the United States maintain the stability of the US dollar exchange rate, but also by expanding imports, and strive to achieve balance of payments.

But the purpose of the Chinese government's move is not to reduce the pressure of RMB appreciation, but to maintain the stability of the RMB exchange rate, so as to reduce the instability of the international financial market brought about by the instability of RMB.

However, the advocator of the appreciation of the renminbi suggests that the renminbi will not be revalued and will be buckled by the international currency, especially the US, to manipulate the exchange rate.

In fact, whether the United States or Japan, the government has never stopped the exchange rate adjustment.

In short, the RMB exchange rate stability should be the general trend this year.

However, the RMB should gradually change from the stability of the US dollar to the stability of the RMB exchange rate index.

This requires the central bank to launch the RMB exchange rate index compiled by our country as soon as possible.

Secondly, the central bank should adjust the exchange rate by adjusting interest rates just like Japan and the United States.

At present, by adjusting the scale of trade credit and the interest rate of trade loans, we can avoid the negative impact of the depreciation of the US dollar on the trade of non US importing countries, thereby regulating the monetary structure of the US dollar and non US dollar in China's foreign trade income and stabilizing the exchange rate of RMB against non US dollar currencies.