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RMB Is Expected To Continue To Accelerate Appreciation.

2011/4/19 9:20:00 50

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Imported Inflation RMB Exchange Rate Boao Forum

Since April

RMB rate

The continuous high altitude is becoming a unique landscape.

As of April 18th, the RMB exchange rate in the 10 short trading days since April, as many as 8 trading days hit a new high since the reform of the exchange rate, a cumulative appreciation of 0.39% in half a month, which was rare since the launch of the remittance reform in July 2005.

Observers here pointed out that

Fighting inflation

Under the background of the current monetary policy's top priority, various policy tools are being launched in the near future, and as an important means to deal with imported inflation, the appreciation of the renminbi will continue to accelerate.

Since late March, with the European Central Bank raising interest rates for the first time in nearly 3 years, the US dollar index has seen a new round of decline in the international foreign exchange market, and in April 14th, it achieved a new low of 74.62 points in the past 16 months.

During this period, the main non US currencies such as the euro, the pound and the Australian dollar continued to grow significantly, of which commodity currencies, the Australian dollar and the US dollar, hit a record high of 1.0582.

It is worth noting that during this period, the central parity of the RMB exchange rate has not only followed the other non US currencies simultaneously, but also created a new high exchange rate in the case of a rebound in the US dollar.

Governor of central bank

Zhou Xiao Sichuan

16 days in

Boao Forum

In an interview with the media at the annual meeting 2011, it was said that the exchange rate tool had been used to combat inflation and the renminbi had also appreciated rapidly in the early stage.

In addition, Zhou Xiaochuan also pointed out that interest rate policy is not only an advantage but no shortcoming. Under the circumstance of global liquidity, if interest rate tools are used too much or too fast, it will lead to larger inflow of hot money and capital.

Analysts said that President Zhou Xiaochuan's statement further gave the exchange rate tool a new role in the current macroeconomic situation.

Since the second half of last year, with the steady return of monetary policy, the central bank has raised the deposit reserve ratio and the benchmark interest rate for the 7 time in four consecutive quarters since the 7 quarter of 2010.

From the perspective of maintaining the flexibility of the late monetary policy mix and the regulation flexibility of the single monetary policy, the exchange rate instruments can be further advanced to the front stage after the intensive tightening of interest rates and raising the reserve ratio.

In a sense, under the policy target of inflation control, RMB appreciation will have a special substitution effect on interest rate, reserve ratio and other policy instruments.

An important feature of the current round of price rises since 2010 is the high inflation pressure on imports.

Despite the recent decline in international crude oil and other commodity futures prices, they are still hovering at high levels.

At the same time, the weakness of the US dollar and the loose orientation of the Fed's monetary policy have not changed materially.

It can be predicted that imported inflation pressures currently facing the world's emerging economies will continue in the longer term.

A faster appreciation of the renminbi at a reasonable level will also help ease the import pressure from outside.

It is worth noting that in the recent high exchange rate of RMB, other major non US currencies, such as the euro, are also on the strength of the exchange rate. At the recent stage, the exchange rate of RMB against major non US currencies has not risen significantly.

Therefore, from the perspective of the effective exchange rate of RMB against a basket of currencies, the RMB can continue to expand substantially and expand its revaluation space.

As for the capital market, in the context of the steady and rapid growth of the macro-economy and the fact that the A share market is still at historically low valuation level, the appreciation of the renminbi will accelerate, or it will become a new driving force for the market to climb.