The Central Parity Price Of The Yuan Broke 6.63&Nbsp First; The Central Bank Or The "Combined Boxing" Suppressed Inflation.

　　 In November 11th, G20 The summit began in Seoul, South Korea. Same day RMB Against dollar The central price broke through 6.63 for the first time, at 6.6242, up 208 basis points from the previous day, and has risen 338 basis points in the past three days, or 0.5%.

"RMB appreciation in the near future is due to international pressure, especially at the G20 summit. Huang Yiping, a professor at the National Development Research Institute of Peking University, said: another reason is that quantitative easing in the United States has increased the risk of domestic inflation pressure and asset bubbles, and the appreciation and the reserve ratio are all designed to reduce relative risks in a relatively tight currency. "

The central bank's determination to tighten the currency is also evident from the open market operation on that day.

The central bank issued a 10 billion yuan three year central bank vote and a 15 billion yuan three month central bank vote on the same day. At the same time, it carried out 40 billion yuan repo operation, and this week the net withdrawal 30 billion yuan, which does not include the raising of the deposit reserve rate this week or the freezing of 300 billion -4000 billion yuan. At the same time, after issuing 5 basis points on the 9 year of the issuance rate of the central issue, the 15 and 4 base points of the three and three month central bank issuance rates rose 11 days respectively.

Both spot and forward exchange rates are soaring.

Within two days, the central parity of RMB against the US dollar has broken 6.65 and 6.63 two historical points, and the 11 day intraday further breaking 6.62.

The central parity of the yuan against the US dollar hit a new high last October 15th, which was 6.6497 on the day, breaking 6.65 for the first time, but since then, it has dropped and hit a low of 6.6986 in October 28th. After entering the November, the RMB exchange rate has gone out of the trend and started a new round of rising, only a small adjustment in November 8th. At the same time, the dollar index began to rebound after the early fall, and the major non US currencies such as the euro, the pound, the yen fell, only the renminbi rose.

"The central parity of the renminbi has been so high recently that we find it strange that, as we have observed, before the yuan dollar would rise much more if the non US currencies rose to the US dollar, the fact that the non US currencies were falling, such as the euro, actually rose, which is a bit unusual. "Foreign exchange trader of foreign bank said.

He said that although the price of the US dollar traded on the RMB market was above the middle price after opening, it fell back below the middle price. "The market has begun to digest the information of the central bank, so in the afternoon, we are heading for a deeper direction of RMB appreciation. "

As for the US dollar's rebound, the traders think that this is only a technical adjustment. "The fundamentals of the dollar have basically not changed, but the data on non-agricultural employment announced last Friday are better. The dollar should just be adjusted, and it may last for one to two weeks. "He also pointed out that in recent years, the RMB versus foreign currency forward market has changed more than the spot market. The quoted price shows that the rise of the 1 year long term RMB has exceeded 1800 points, which is rare in the near future. It shows that the appreciation of RMB is expected to rise. "The main reason is that the latest notice of the safe has made new provisions for the RMB and foreign currency forward spanactions made by the banks before, which means that commercial banks have a greater risk of holding forward positions at present, which has a relatively large impact on the price quoted by banks in the forward market. The appreciation rate of RMB against the US dollar in the longer term price is greater than that before the announcement. "The trader said.

Central bank "combination" to curb inflation?

While both the spot and forward exchange rates are soaring, the central bank is tightening liquidity through various means.

Huang Yiping believes that this shows that the central bank is using the "tight money + exchange rate appreciation + foreign exchange control" combination means to reduce domestic inflation and asset bubble risk. "Within the existing policy framework, the three combinations are the best combination. Monetary tightening is not necessarily an increase in interest rates. In China, we can raise the deposit reserve ratio and increase the momentum. "

The October CPI rose 4.4% in November 11th, a 25 month high, indicating that domestic inflation pressure has further increased. The previous day, the central bank has announced that the deposit reserve ratio of deposit financial institutions should be increased by 0.5 percentage points from 16 to 0.5. In the open market operation of the next day, the central bank has not yet reduced the strength of the withdrawal, but has recovered the amount of $65 billion.

While the central bank has stepped up efforts to tighten liquidity, rumors of rising interest rates have also been rampant. Huang Yiping said that although tightening money does not equate to raising interest rates, CPI means 4.4%, which means that negative interest rates have intensified.

He said at the same time that the yuan should be further appreciated. "Although the direct effect of appreciation on inflation is not necessarily large, the appreciation is equivalent to the continued downward pressure on the exchange rate. The pressure of appreciation is not the nominal exchange rate rise, or inflation, and the pressure of capital inflow. The pressure on foreign exchange market intervention will be greater if it does not appreciate. "

While raising interest rates and appreciation may increase the attractiveness of "hot money", many scholars, including Huang Yiping, suggested that capital controls should be strengthened in the short term to minimize the "hot money" inflow. "Hot money is basically coming through the current account channels, which should be further investigated and dealt with. In addition, short-term capital inflows can also be set up, such as levying taxes on short-term capital."