RMB Appreciation In 16 Years 56%

　　 In December 16th, the data released by the bank for International Settlements (BIS) showed that the nominal and real effective exchange rates in November both rose and fell, rising 0.72% and 0.47% respectively, and 32.8% and 56.6% respectively since 1994.

"In November, mainly the US dollar rebounded, leading to a decline in the major non US currencies such as the yen and the euro, and the renminbi and non US currencies. exchange rate The increase is not small, contrary to the situation in October. Foreign exchange trader of foreign bank said.

While the nominal effective exchange rate is rising, RMB Although the real effective exchange rate has also risen, China's CPI rose by 5.1% in November, making it less than the nominal effective exchange rate, but it has reversed the trend of a 1.24% decline in October.

Nominal exchange rate will continue to rise

According to the data released by the bank for International Settlements, the RMB effective exchange rate index in November was 112.59, rising by 0.72%. Before that, the nominal effective exchange rate of RMB has dropped in April, and the decline in October was the largest in four months.

In the 7-10 months of this year, the monthly nominal effective exchange rate of RMB was 115.72, 114.12, 113.81 and 111.8, respectively, decreasing by 1.45%, 1.38%, 0.27% and 1.77% respectively. Even in the September, when the yuan appreciated 1.7% against the US dollar, the nominal effective exchange rate of the yuan also declined, but the decrease was the smallest in four months.

The nominal effective exchange rate of RMB declined sharply in October, mainly because the yuan fell 1.14% and 2.75% respectively against the euro and yen in the same month. In November, the yuan rose to 4.14% against the yen, and rose sharply by 6.13% against the euro. Therefore, although the renminbi rose slightly against the dollar in the month, the RMB effective exchange rate rose by 0.72%.

"November was relatively unstable, first Ireland debt. crisis Later, it was the Korean and Korean crisis. The risk aversion funds poured into the US dollar. Other non US currencies basically fell, and the euro and Japanese yen both fell a lot. The foreign exchange trader said.

In the basket of currencies currently calculated by the bank for International Settlements, the total share of the six currencies of the Japanese yen, US dollar, euro, Korean won, Hong Kong dollar and new Taiwan dollar amount to 83.6%, of which the weight of Japanese yen is the largest, reaching 26.2%, the weight of US dollar is 20.3%, and the weight of Euro dollar is 17.8%.

"After entering the December, although the RMB against the US dollar rally is not obvious, but because the US dollar continues to rebound, the Japanese yen and the euro are still falling, so it is expected that the nominal effective exchange rate of RMB will continue to rise in December." The traders said.

Rising inflation has lowered the real exchange rate.

The rise of the nominal effective exchange rate directly promoted the effective exchange rate, but the latter increased by only 0.47%.

Generally speaking, the nominal effective exchange rate mainly reflects the exchange rate changes of domestic currencies relative to the basket currencies of trading partners. The real effective exchange rate more reflects the overall competitiveness and actual purchasing power of RMB in international trade. It not only considers the relative change of nominal exchange rate, but also exclude the impact of inflation on the purchasing power of currencies in various countries.

China's CPI rose 5.1% in November, hitting the 28 month high since July 2008. In sharp contrast, the inflation pressures of several major trading partners in China are not large. The US inflation rate in November is 0.10%, and the core CPI index of Japan's Tokyo is even -0.50%. Most European economies except the United Kingdom are not above 2%. {page_break}

"Rising prices have a certain substitution effect on the appreciation of the local currency, so if the inflation rate is higher, the real effective exchange rate will increase less than the nominal effective exchange rate, or even the nominal effective exchange rate, but the effective exchange rate will fall." The traders said.

In fact, there has been a divergence of nominal and real effective exchange rate in the past four months. In August and September, the nominal effective exchange rate of RMB decreased by 1.38% and 0.27% respectively, but the real effective exchange rate increased by 0.62% and 0.83% respectively.

Although the nominal and effective exchange rate of RMB has changed considerably over the month, the nominal and effective effective exchange rate of RMB has risen by 32.8% and 56.6% from 1994 to November 2010, according to the bank for international settlements. The real effective exchange rate of RMB rose to the top 10 in the 58 economies of BIS.