Chen Fengying: World Economy Or Bottoming Out In The Three Quarter

Chen Fengying, director of the World Economic Research Institute of the China Institute of modern international relations, said in an interview with the China Securities Daily reporter that the downward trend of oil prices is not long-term, and that the appreciation of the US dollar will not be too long.

emerging market

China Securities Journal: Recently, international oil prices have plummeted and even hit a new low for 4 months. What is the reason?

Chen Fengying: it should be said that the fall in oil price is related to the appreciation of the US dollar, mainly due to the increase of investor's uncertainty about the world economy and the increase of risk aversion.

Now the global economy is in a sensitive period, the European debt crisis has worsened, and emerging market economic growth has also slowed down. Investors are worried that the world economy will have a "two bottom".

Under the risk aversion, capital flows back to the US dollar.

As the US dollar is the currency of settlement, once appreciation will create downward pressure on commodities such as dollar denominated oil prices.

In addition, the market is expected to reduce demand for commodities in emerging markets, which is also a factor in the fall in oil prices.

China Securities Journal: how to treat

Chen Fengying: in the financial market, crude oil has long been a financial product and is out of touch with the real economy.

From the perspective of supply and demand, oil price should be around 80 dollars per barrel, and now Brent crude oil is more than 100 dollars per barrel, so the current oil price is dropping from high position, and the world economy's endurance to oil price fluctuation is also increasing.

In addition, when the US dollar is strong, the fall in commodity prices is a good thing for the world economy.

If oil prices stay above $120 a barrel, there will be problems in the world economy.

In the case of high oil prices and low US dollars, the inflation pressure of the emerging market economy has increased. Finally, oil prices have come down when demand is falling.

Now that oil prices are falling and the US dollar is strong, to a certain extent, it has eased the pressure of appreciation in emerging markets and the inflationary pressure brought by rising commodity prices.

Oil price down or just short-term phenomenon

China Securities Daily: when will the market volatility of risk aversion last?

Chen Fengying: now the US dollar index is at 75, not very high, and the dollar appreciation will not be too long before the US dollar appreciates, because the appreciation of the US dollar does not have policy support.

To create jobs and increase exports is a policy explicitly put forward by Obama. Increasing exports can only increase competitiveness through monetary means without realizing technological innovation.

This shows that the US monetary policy is very clear - the policy does not support the appreciation of the dollar.

As a currency hegemony country, the power and means of lifting the dollar are in the hands of the United States. If the US dollar appreciates rapidly in the near future, the possibility of introducing QE3 in July will be great.

The spillover effect of the US policy is very strong. Once QE3 comes out, the impact on the world economy will be greater.

Another reason for not supporting the US dollar's appreciation is that there will be no two recession in the world economy.

The world economy has moved from crisis to expansion.

But the expansion period is repeated, and there will be a low level of development, causing panic among investors.

But we should see that the contribution of emerging markets to the world economy has not been reduced, and it is still the main financing channel, and the developed countries have gradually recovered, so the current world economy is down or just a false impression, and the time will not last too long.

With the three quarter data picking up, the world economy will bottom out.

China Securities Journal: how to judge the trend of international oil prices in the coming months?

Chen Fengying: summer is the period of oil price seasonal decline. With the release of the two quarter economic data, the panic will gradually subsided, and the global economic downturn in the three quarter may be over.

In addition, there is news that in the future, Obama may introduce a new deal to support project construction, including building thermal protection facilities, which will have an effect on oil prices.

From a macro policy perspective, whether Europe or the United States, or in the overall introduction of a series of policies to avoid the two recession, policy will not be too tight.

Therefore, entering the three quarter, if suddenly good news releases, such as optimistic data on China's economic growth, it is likely to stimulate idle capital to enter the commodity market, and the price of oil will go up again.

In my view, the US dollar index remains at around 80, and international oil price is around us $90 per barrel, which is closer to supply and demand and is most conducive to the recovery of the world economy.