RMB Exchange Rate Two-Way Floating Range Is Expected To Expand

In a report on the work of the government, Premier Li Keqiang said in 5 days that we should keep the RMB exchange rate basically stable at a reasonable and balanced level, expand the two-way floating range of exchange rates, and promote the convertibility of Renminbi capital items.

Analysts believe that the people's Bank of China integrated the previous position, and recent RMB versus US dollar Successive devaluation has broken the market expectation of "rising interest". After the two sessions, it will become the time window for the central bank to expand the two-way floating zone of exchange rate. If so, this will become another major financial reform measure after the central bank speed up the marketization of interest rates.

On the 4 day, Zhou Xiaochuan, a member of the CPPCC National Committee and governor of the Central Bank of the CPC, nodded his head in the face of a reporter's question whether he would expand the RMB trading section again this year.

Since April 16, 2012, the daily fluctuation range of RMB against the US dollar has expanded from 0.5% to 1%.

Zhou Xiaoqiang, President of the National People's Congress and governor of the Chengdu branch of the people's Bank of China, said that the direction of China's exchange rate is to let the market decide the formation of exchange rate, and the market factor itself contains market fluctuation, sometimes fluctuating slightly, sometimes a bit larger. In the future, if the market is more effective, the expansion of volatility is entirely possible, which is normal and also the direction of reform.

Ma Xiaoping, an economist at HSBC China, said that the central bank has been looking for "the right time" and trying to expand the two-way floating range of RMB exchange rate.

She said that in November last year, Zhou Xiaochuan published his signature article in the third Plenary Session of the 18th CPC Central Committee, describing the road map of financial reform, in which exchange rate and interest rate reform were placed in an important position. Earlier, Yi Gang, member of the CPPCC National Committee and vice president of the central bank, said at the spring annual meeting of the International Monetary Fund, held in April last year, that China will expand the two-way floating range of the exchange rate in the near future.

Ma Xiaoping believes that only when the market is right RMB When the expectation of appreciation or depreciation is divided, it is the right time. Last year, the renminbi has been appreciated unilaterally. If we expand the two-way floating rate of RMB exchange rate again, we may further strengthen the appreciation.

She believes that the time is ripe. After the recent devaluation, from the point of view of transaction data, the market is in a state of differentiation and balance.

In the past month or more, the central parity of RMB has depreciated rapidly from 6.0969 yuan to 6.1236 yuan in March 4th, the depreciation rate is about 0.44%, and the spot exchange rate has been reduced to 6.18 from 6.05 in the middle of January, and the depreciation rate is about 2.15%. Last year, the renminbi appreciated by about 3%.

Wang Tao, chief economist of UBS China, said that increasing exchange rate flexibility is a consistent goal of China's exchange rate reform. Expanding two-way volatility is one of the ways to increase flexibility. She thought that there should never be a perfect time and should not wait too long.

Wang Tao also said that if it does not expand Fluctuation interval It can also increase flexibility under existing frameworks. The most important thing is to allow the renminbi to rise or depreciate and break the expectation of unilateral appreciation.

Lu Ting, chief economist of Merrill Lynch Greater China, believes that the recent expansion of the US dollar to the US dollar should at least release the positive signals of exchange rate reform, so the timing is appropriate.

Lu Ting, Wang Tao and Ma Xiaoping all predict that if the floating interval expands, the range of daily fluctuation will probably expand from 1% now to 2%. Most analysts surveyed by Peng Bo news agency also believe that the RMB trading range is expected to expand from 1% to 2% in the second quarter of this year.

In the third Plenary Session of the 18th CPC Central Committee, the decision of the Central Committee of the Communist Party of China on several major issues of comprehensively deepening reform proposed that the formation mechanism of RMB exchange rate marketization should be improved.

Lu Ting believes that the ultimate goal of exchange rate reform is to abandon all benchmarks and let the market play a decisive role. The central bank only intervenes when financial markets are too volatile and exchange rate fluctuations are too large. Singapore and many other countries have accumulated theoretical and operational experience in this area.

Ma Xiaoping said that although central banks will intervene in the foreign exchange market, they will make the market play a bigger role in a more mature market. China's foreign exchange market is in the process of development and development. Reducing intervention will be a trend.