The Rapid Appreciation Of RMB

On the 2 day, the people's Bank of China authorized the China foreign exchange trading center to announce that the US dollar reported 6.2082 yuan to the central parity of RMB, which was 126 basis points higher than the previous trading day. However, on the 3 day, the central parity of the RMB against the US dollar had a callback of 6.2152, which was 70 basis points lower than the previous trading day's callback. Experts said that the RMB exchange rate has been developing at a high level, and we need to be vigilant against the impact of two-way wide fluctuations in the exchange rate on the economy.

What is particularly noteworthy is that on the evening of 2, the European Central Bank announced that the benchmark interest rate would be reduced by 25 basis points to 0.5%, which is the first European Central Bank's interest rate adjustment since last July 5th. Analysts believe that this adjustment will further boost. RMB Exchange rate climbed.

However, the medium and long term factors in China's support for the strength of the renminbi are deteriorating: the demographic dividend window is closed, the rate of return on capital is fast descending, and the potential growth level has dropped significantly. In March, China had a trade deficit. If the trade deficit persists, foreign exchange holdings may shrink significantly.

Externally Economics Under the background of environmental uncertainty and the continuous promotion of quantitative easing policy in developed countries, some experts say that only by further expanding the exchange rate floating space and increasing the resilience of the economy, will it reduce unnecessary economic and financial risks.

　 Speculation of appreciation

The rapid appreciation of the renminbi has led to different speculation about the reasons behind it.

Since the three quarter of last year, the Central Bank of developed countries has launched an unprecedented quantitative easing competition. While the Central Bank of China frequently used the reverse repurchase mode to inject liquidity into the market and did not use interest rate leverage at the same time, leading to the fact that China's benchmark interest rate is higher than the US comparable interest rate level at the same time, spreads and spreads exist simultaneously to create greater arbitrage space for overseas funds, and drive capital reflux to push up the continued appreciation of RMB.

According to the latest data from the Central Bank of China, the first quarter increased the amount of foreign exchange held (by the central bank's foreign exchange assets and the corresponding domestic currency), which was 1 trillion and 200 billion yuan. Among them, the new scale of 236 billion 300 million yuan in March has narrowed compared with 295 billion 426 million 600 thousand yuan in February and 683 billion 659 million yuan in January, but the full caliber foreign exchange occupation has been growing steadily for 4 consecutive months.

Foreign exchange accounted for 4 consecutive months of increase, indicating that "hot money" is continuing to flow into China. Experts believe that the trend of "hot money" inflow is still continuing. Because of the lack of hedging financial instruments and reverse market forces, this has led to the rising central parity of RMB.

Other economists have different understandings of the reasons for the strength of the renminbi. Liu Yuhui, chief economist at Huatai Securities (10.06,0.25,2.55%), believes that the strength of the renminbi is "weak", because the RMB exchange rate and the strength of China's foreign exchange have been strong in the past four months. To some extent, the exchange rate of the central bank under the central bank's central parity has been sustained. If the trade deficit in March is sustained, the foreign exchange occupation caused by the interest set will probably shrink, and China's balance of payments will return to the weak position of last year. He believes that stronger renminbi will lead to a worsening of current account surpluses, eventually subsidizing and exacerbating capital outflows.

　 First appreciation and then depreciation?

Most analysts believe that the power to continue to strengthen the renminbi will not be too big in the future. Judging from the current situation, the main reason for maintaining the appreciation of the renminbi is mainly because the current account surplus will probably remain at a level similar to that of last year. But in the short term, the economic data in the first quarter are relatively weak and may be worried about macroeconomic worries.

A series of recent economic data shows that China's economic recovery momentum is weaker than expected, and is in a weak recovery state: the economic growth rate of 7.7% in the first quarter was lower than the market expected 8%; in April, the official manufacturing index of HSBC and China Manufacturing Purchasing Managers Index (PMI) fell again after a brief rebound in March.

Zhu Haibin, chief economist of JP Morgan, believes that the momentum of capital inflows may drop in the short term.

On the other hand, from exchange rate From the perspective of appreciation, the appreciation of the US dollar in the three quarter of last year is about 2%-3%. From the perspective of real effective exchange rate, the appreciation in the past five or six months is about 6%. This is likely to have a negative impact on trade in the next two quarters. Therefore, the momentum of RMB's further strengthening may not be too great.

There is also the industry believes that there is little room for further appreciation of the renminbi, and is expected to depreciate after the recent appreciation. The depreciation may occur in the three and fourth quarter of this year, especially after the rise in the interest rate of the Federal Reserve. The RMB exchange rate emphasizes on a basket of currencies such as the US dollar, the euro, the yen and so on. Against the backdrop of the devaluation of the Japanese yen, the sharp appreciation of the RMB is unfavorable for the overall economic operation. If the Federal Reserve ends the quantitative easing policy, it will trigger a change in the flow of capital. In the second half of this year, there will be a trend of RMB depreciation and liquidity tightening.

　 Or accelerate the marketization of exchange rate.

Since the financial crisis, many developed countries have launched a number of quantitative easing policies to stimulate economic recovery, especially in the recent large-scale easing monetary policy of the Central Bank of Japan, resulting in a significant depreciation of the yen, triggering a market's concern about the competitive depreciation of major currencies.

Under the background of currency competitive devaluation in various countries, whether expanding the fluctuation range will bring further appreciation of RMB and whether it will bring economic impact has also become the focus of attention of the industry.

A few days ago, Yi Gang, vice president of the central bank, said at the group meeting of the IMF spring conference, "the RMB exchange rate will be more market-oriented, and the people's Bank of China will further increase the range of exchange rate fluctuations in the near future." In recent days, the RMB exchange rate has continued to hit a new high, and it has foreshadowed the possibility of further expansion of the exchange rate range.

Yi Gang said that since 2005, the marketization reform of RMB exchange rate formation mechanism has made significant progress. As of now, the nominal exchange rate of RMB has appreciated by about 32%, and the effective exchange rate of RMB has appreciated by more than 36%. Judging from the market situation, it is appropriate to consider further widening the fluctuation range of the RMB exchange rate.