RMB To Us Dollar Spot Exchange Rate Expansion

< p > although the RMB against the US dollar spot exchange rate expanded from 0.3% to 2%, China's RMB exchange rate trading market has not grown up, or has grown very unsound.

The most prominent manifestation of this unsound situation is that there is basically no hedging force and hedging pactions in the RMB exchange rate market, that is to say, in the RMB exchange rate market, there are only a few parties but no empty parties.

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< p > the central bank announced that since March 17th, the spot fluctuation of RMB against the US dollar has increased from 1% to 2%.

Although the decision of the central bank to expand the volatility of the RMB exchange rate is expected in the market, it was announced in March that it really surprised the market, which allowed the market to have greater expectations for the eventual convertibility of the renminbi.

However, taking into account the pressure of China's financial market environment and economic pformation and the widened volatility of the RMB exchange rate, we should focus on building the RMB exchange rate market, foster the RMB exchange rate market air force, and improve the RMB to us dollar pricing mechanism.

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After RMB exchange rate reform in 2005, the appreciation of RMB against the US dollar has risen by more than 30%.

In 2014, the RMB exchange rate fluctuated in a narrow range.

In recent years, the RMB has seen a significant depreciation trend, which is considered as a foreshadowing for the RMB exchange rate to expand the range of fluctuation.

Since 2005, the floating rate of RMB has been adjusted at an initial rate of 3%.

In 2007, it was adjusted to 5%.

In 2012, it was adjusted to 1% and then to 2% now.

In the past 10 years, we have pushed forward the RMB settlement of cross-border trade, allowed domestic enterprises to invest directly in foreign currencies, and provided "reflux" channels for Hongkong's offshore RMB market through RQFII. Various measures have shown that the RMB has been steadily advancing on the road of internationalization.

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< p >, however, the international status of < a href= "http://www.91se91.com/news/index_c.asp" > RMB > /a "is still difficult to balance with China's status as the world's second largest economy. This has also become an important topic of concern and discussion by the financial industry experts."

The expansion of the RMB exchange rate to 2% is expected to arrive, which gives people more hope for the further reform of the RMB exchange rate formation mechanism.

There is even a view that the full convertibility of the renminbi may be at hand.

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< p > indeed, the rapid development of China's economy and the continuous advance of China's financial reform and development have naturally accelerated the reform of the RMB exchange rate.

However, we have to realize that although the RMB against the US dollar spot exchange rate expanded from 0.3% to 2%, China's RMB exchange rate trading market has not grown up, or has grown very unsound.

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The most prominent manifestation of this P deficiency is that there is basically no hedging force and hedging pactions in the RMB exchange rate market, that is to say, in the RMB exchange rate market, there are only a few parties but no empty parties.

And there is no market that is unhealthy or even deformed.

The fundamental reason for the current situation of China's RMB a href= "http://www.91se91.com/news/index_c.asp" > exchange rate market < /a > is that the RMB has continued unilateral appreciation for many years.

Data show that, since the two RMB exchange rate reform, although the RMB exchange rate against the US dollar will show a slight fluctuation in stages, the trend of appreciation has not changed, either in the past with huge surplus in China's foreign trade, or almost two years after the trade surplus narrowed and almost reached trade balance.

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< p > another prominent problem is that the pricing mechanism of < a href= "http://www.91se91.com/news/index_c.asp" > RMB to us dollar < /a > intermediate price does not meet the requirement of RMB exchange rate marketization.

In the past one or two years, the divergence between the RMB exchange rate against the US dollar and the middle price has almost become the normal market, which highlights the serious shortage of the marketization level of the RMB price parity mechanism.

Obviously, the central parity pricing mechanism should be an important step for the central bank to establish and improve the RMB exchange rate market.

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< p > in fact, if the RMB remains in the market of unilateral appreciation for many years, the impact of the hot money inflow brought about by the full convertibility of the RMB is predictable.

The best way to prevent the influx of hot money is to let hot money take risks.

Greater exchange rate fluctuations, supplemented by more empty forces and better pricing mechanisms, will significantly increase the cost of hot money access.

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< p > of course, the expansion of exchange rate fluctuation has great impact on import and export enterprises. If there is no necessary hedging mechanism, the cost control will be even more difficult.

After the expansion of the exchange rate, it means that enterprises need more risk management of RMB foreign exchange pactions, and more enterprises are encouraged to use Renminbi as currency of settlement in foreign trade and reduce the corresponding risks.

Finding financial institutions and formulating risk avoidance schemes has become a realistic choice for many export enterprises. This will undoubtedly increase the burden on enterprises, but this cost can be sustained.

Besides, banks and other financial institutions should also strengthen their risk management capabilities for foreign exchange assets. Enterprises can hedge their assets by buying some financial derivatives, locking forward exchange rates and avoiding the risk of exchange rate fluctuations.

At present, there are not many financial derivatives that can be hedged by enterprises. Therefore, financial innovation in this area will continue to be launched under the premise of controllable risks.

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