In July, The Two Effective Exchange Rates Of The Renminbi Varied.

July RMB

Data released by the Bank of International Settlements (BIS) in August 16th showed that the real effective exchange rate index of the RMB in July 2011 was 117.86, reversing the previous month's downward trend, rising by 0.53% compared with the same period.

As for the two effective exchange rates, Zhou Hao, an economist at the global marketing department of the New Zealand Bank, said in an interview with the first Financial Daily reporter that this is mainly due to the high domestic inflation in July.

Zhou Hao told reporters: "the difference between the real effective exchange rate and the nominal effective exchange rate is the inflation mean minus the average inflation rate of its major trading partners, which reflects the difference between domestic and foreign inflation."

In fact, Zhou Hao said a few months ago that with the high inflation rate, the gap between the real effective exchange rate of RMB and the nominal effective exchange rate is also expanding.

But if this gap is narrowed, and domestic inflation has not slowed down, it can be deduced that inflation is becoming a global problem.

In addition, the central parity of RMB against the US dollar has been increasing in recent years, and many "RMB appreciation will lead to bankruptcy of export enterprises".

According to the central parity data released by the China foreign exchange trading center, in July, the RMB did appreciate by about 0.42% against the US dollar.

Why does BIS calculate the nominal effective exchange rate of RMB instead?

In this regard, Zhou Hao believes that this is because the renminbi is still showing a downward trend against other non US currencies: in July, the renminbi showed a trend of "rising first and then falling" against the euro, showing a clear unilateral depreciation against the Australian dollar and a larger decrease against the Japanese yen.

In fact, the appreciation of the renminbi against the US dollar does not reflect the full picture of the renminbi against the "basket of currencies".

From the beginning of this year, as at the end of 7, the RMB exchange rate of China's foreign exchange trading center was 4.24% against the euro, and the depreciation rate of RMB against the Japanese yen was 2.42%.

The appreciation of the yuan against the US dollar in the year ended July was 2.38%, but compared with that in July, the US dollar index fell by 6.50% over the year, much higher than that of the renminbi.

BIS data show that although the RMB real effective exchange rate reversed the June decline in July, its depreciation rate still reached 1.73% during the year.