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Will There Be A Significant Depreciation Of The Renminbi?

2014/2/11 13:04:00 28

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recently, the "a href=" http://www.91se91.com/news/index_c.asp "/a" turbulence in the emerging market has aroused the thinking of all parties.

According to media statistics, in the past month, there has been a significant devaluation of currencies such as Ukraine, Turkey and lirvania.

Among them, the depreciation rate of Argentina pesos is even more alarming.

In addition, the stock market performance of emerging economies is equally bad. The average stock market decline in emerging economies has reached 7.5% since this year.

take the recent global hot debate in Argentina as an example. The accumulated depreciation rate of the country's currency in the short term has reached 22.8%.

In view of the severe local inflation level, the benchmark interest rate has been raised to 28.5%.

At the same time, the annual interest rates for individual loans of major commercial banks in the local area rose to 49% to 52%.

According to the agency statistics, the total cost of the one-year loan of the local individual borrowers is 85% of the loan amount.

in the face of such a severe economic environment, many market participants are worried about whether Argentina's currency crisis will spread to other major countries quickly.

In fact, Argentina has also had many monetary crises in Argentina over the past few decades.

Looking at the local currency crisis, we can hardly get away from the huge debt accumulation, severe inflationary pressure and economic recession.

Under the local development mode of Argentina, P relies on foreign capital and other effective measures to enhance local investment demand, which eventually leads to the crisis and even seriously affects the sovereignty security of the country.

However, in view of Argentina's frequent monetary crisis, it is essentially a question of credit deficiency.

This is also the root cause of the repeated outbreak of the currency crisis in Argentina.

commented that the large-scale financial turmoil in emerging markets came mainly from worries about the US's reduction or even the expectation of delisting.

At the same time, the market's fear of the new Federal Reserve Chairman Yellen has aggravated the market panic.

indeed, from the development mode of some emerging markets in the past few years, the pace of monetary issuance almost follows the United States.

Over the years, the Fed has injected a lot of liquidity into the global market through the QE. On the one hand, it has boosted confidence in some markets, and on the other hand strengthened the dependence of some markets on loose monetary environment.

since the Federal Reserve resolution last December reduced the amount of debt to $75 billion, some emerging markets also sought to reduce dependence on long-term accumulation by various means.

however, the current reality is that under the background of the gradual reduction of QE in the United States, the pattern of currency devaluation and severe inflation coexist, and some countries have to take advantage of interest rate increase measures to control this phenomenon.

Last month, the fed again decided to reduce the size of the debt purchase by 10 billion US dollars to US $65 billion, and the superposition effect of various factors will further affect the direction of money in emerging markets. P

As a result, currencies such as Argentina, Brazil, Ukraine, South Africa, India, Turkey and other emerging countries weakened again.

According to some media, the ability of QE reduction is not resisted.

however, in the emerging markets, while the stock market has shrunk, there has been no overreaction in the emerging markets represented by China.

According to institutional statistics, investors recently pumped $2 billion 500 million out of the stock market of emerging economies.

But signs of capital inflow are emerging in emerging markets such as China and Mexico.

with the complete collapse of currencies such as Argentina and Brazil, will the yuan depreciate significantly? I believe that for the time being, the depreciation of the RMB may be very small, mainly for the following reasons.

1. China's trade surplus boosts the strength of the RMB exchange rate.

According to the latest statistics, in 2013, Germany's foreign trade surplus stood at 200 billion euros in the position of the first surplus country in the world.

China ranks second in the world with a surplus of US $195 billion.

In addition, since the reform of RMB exchange rate system in 2005.

The exchange rate of RMB against the US dollar has appreciated by more than 36%.

With its unique advantages, China's trade surplus environment can hardly be fundamentally reversed.

In this context, in essence, it also blocked the sharp depreciation of the renminbi.

Second, the international pressure on RMB appreciation is constantly decreasing, and the possibility of significant depreciation is decreasing.

As of November 2013, China held a total of US $1 trillion and 316 billion 700 million of US debt, an increase of US $12 billion 200 million compared with the revised US $1 trillion and 304 billion 500 million in October last year.

China is still the largest creditor country in the United States.

From the current account balance deficit between China and the United States, the developed countries with the United States as the main factor to offset their negative trade factors, the phenomenon of pressurized RMB appreciation still exists.

Third, accelerating the internationalization of "a href=" http://www.91se91.com "RMB" /a "internationalization needs the stability of RMB.

Over the years, China's capital market and other channels have not been fully opened, to a certain extent, reducing the impact of external factors.

However, under the background of long-term lack of currency discourse power, China urgently needs to promote the internationalization of RMB in order to safeguard its fundamental interests.

In recent years, China has made a lot of efforts to promote the international pformation of RMB. P

Among them, actively promoting the China Japan Korea free trade area is a powerful way for China to promote RMB internationalization.

The "P, China, Japan and Korea Free Trade Area", as the first idea put forward in 2002, will not only enhance the interaction and cooperation between the three countries, but also reduce the reserve for the US dollar and strengthen the strategic goal of regionalization of RMB.

Unfortunately, because the scheme seriously hinders the vital interests of the interest countries, and the relations between China and Japan are also deteriorating continuously, the difficulty of advancing at present is rather huge.

the Shanghai free trade area, which was officially listed in September 29th last year, is an example of accelerating the internationalization of RMB.

As the first free trade zone in mainland China, the Shanghai free trade area will gradually realize the decentralization of RMB capital account and the realization of free convertibility in the FTA.

At the same time, the full liberalization of interest rate and the marketization of exchange rate in the future free trade area will also play an effective role in promoting the internationalization of RMB P.

It is worth mentioning that the establishment of the Shanghai free trade zone is the first opening window for China to join the p Pacific Partnership Agreement (TPP), and it is intended to achieve a greater degree of strategic development.

I believe that although some emerging markets are experiencing currency crises, there is little possibility that the RMB will depreciate significantly from the perspective of China's economic development, inflation level and the process of RMB internationalization.

in addition, in the process of accelerating the outflow of international a href= "http://www.91se91.com/news/index_cj.asp" > capital < /a >, there may be a tight pressure on domestic liquidity.

On the whole, however, China's impact on QE reduction and exit expectations will not be too great.