Zhang Tingbin: Don'T Be Afraid Of RMB Depreciation.

< p > since the RMB began to depreciate in February 18th, as of last Friday (February 28th) intraday low of 6.1808, the yuan against the dollar has dropped 1.54% from the beginning of this year, more than half of the 2013 annual increase.

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The /a is divided into two stages: one is the central bank's initiative to lower the opening intermediate price stage, the most obvious one is the central parity of RMB against the US dollar in February 18th, and the two is that the market has accepted the RMB's turning point of depreciation, thus throwing the RMB's buying into the US dollar, which is most obvious in February 28th. Although the central bank opened the central parity price of 6.1214 on the day, the base price was slightly increased by 10 basis points compared with the previous trading day, but after the opening date, it fell below 6.15, 6.16, 6.17, 6.18, and at 11:00, the lowest price was 6.1808. The decline from the middle price reached 0.96%, and the price limit was only one step away from the price limit of the intervention. Then the spot rate of exchange rose slowly and closed at two. < p > RMB < a href= "http://www.91se91.com/news/index_c.asp" > depreciation.

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< p > I think it is advisable for the central bank to reverse the unilateral depreciation of RMB.

Since December 2011, the author has issued many warnings: China should reverse the expectation of unilateral appreciation of RMB, especially when the money making effect of international hot money in China fails and the large-scale external flow is going on. The depreciation of the RMB can avoid hot money to maximize the exchange rate speculative earnings and get away from China.

Otherwise, if the central bank adheres to the RMB a href= "http://www.91se91.com/news/index_c.asp" > /a > stable or even pushes the unilateral appreciation, the central bank will not have enough US dollar cash to pay for the massive outflow of hot money.

In the event of a dollar exchange crisis, the renminbi will be abused.

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< p > in February 11th not long ago, the author and Mr. Yu Yunhui published the article "China's biggest economic and financial security challenge is now", pointing out that if we continue to appreciate the RMB exchange rate policy, the risk will be bigger and bigger.

We suggest that we should give up the strategy of pushing forward the appreciation of the renminbi by referring to the depreciation rate of the emerging market countries in the past year and avoiding the depreciation of the renminbi.

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< p > it needs to be pointed out that the current RMB has been overvalued against the US dollar, and the biggest increase has reached 36.5% since the unilateral appreciation of the RMB against the US dollar in July 2005.

This attracted huge quantities of international hot money speculation in China, and promoted the property market bubble, while the price of housing in all cities increased by more than 3 times in the same period.

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< p > in addition, over the past three years, the currencies of emerging market countries including India rupee, Brazil lira, Argentina pesos, Russian rouble, Vietnam shield and Indonesian shield have mostly depreciated 10%~30% against the US dollar, because the industrial structure of these countries is similar to that of China, which makes RMB's most valuable currency in emerging markets.

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< p > < a href= > http://www.91se91.com/news/index_c.asp > RMB > /a > depreciation is not terrible.

Under floating exchange rates, it is normal for one currency to rise or fall against another currency, just as the tide rises and falls, which can regulate the economy of 10%~30% not to be too excited or depressed.

The fear is that the central bank will lose its international reputation once it lacks sufficient US dollar cash to pay for the hot money left.

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< p > in this game, the key point is that the depreciation rate of RMB is faster than the speed of international hot money outflow.

As a result, the hot money leaving the field will have to spit out the speculative earnings of the past exchange rate, and if the renminbi falls rapidly to the equilibrium point of exchange rate, the hot money in the territory will lose the power to leave the field, which will help China avoid the ups and downs of hot money in and out.

Of course, China's capital account is not yet fully convertible, and the necessary measures can be taken to curb the speed of the outflow of hot money, rather than accelerating capital account convertibility.

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The bad situation may be that when the central bank takes the initiative to reverse the expectation of RMB appreciation and the common expectation of rapid exodus of hot money, the central bank repeates again and again, raising the RMB's middle price again, and even voluntarily throws the US dollar to buy the renminbi so as to maintain the people's currency not to depreciate, which will make the central bank's foreign exchange cash disappear faster.

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< p > in short, since the appreciation of the renminbi is expected to be reversed, the central bank should comply with the market and even expand the RMB floating exchange rate range from 1% to 2%.

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