Liu Xiaochen: RMB Exchange Rate Depreciation And Short-Term Pressure Reduction

"P > experienced a sustained fall in the beginning of the year, and the renminbi had a long term" retaliatory rebound ".

Data show that in March 24th, the RMB exchange rate rose to 362 basis points against the US dollar, hitting the largest appreciation in the past 29 months.

So far, the future trend of the yuan seems to be unclear, and speculation about the appreciation or depreciation of the market is heating up again.

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< p > for this reason, the fund manager of the cash increase fund of the Chinese businessman "a href=" http://www.91se91.com/news/index_c.asp "> Liu Xiaochen < /a > thinks that the RMB depreciation rate has been relatively deep in recent years, and the short-term pressure for further devaluation of RMB since March has gradually reduced. However, in the long run, the fundamental factors that have contributed to the depreciation of the RMB have not changed.

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< p > reviewing the process of the < a href= "http://www.91se91.com/news/index_c.asp" > depreciation > /a >, Liu Xiaochen believes that this is mainly caused by two reasons: first, the export growth rate has been cut down since the first quarter, and the trade surplus has narrowed down gradually. Under this background, the demand for foreign exchange settlement has decreased and the demand for foreign exchange purchase has increased.

Two, the price of RMB CDS (credit default swap) rose from 56BP to 100BP at the end of January, reflecting the global market's view that the risk of RMB default has risen.

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< p > these two factors jointly promote the trend of RMB depreciation since the beginning of this year.

But from the current point of view, at least until April, there is no way to see the factors leading to the weakening of China's economy. Therefore, in the short term, the renminbi will remain relatively stable.

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< p > in the long run, the change of China's a href= "http://www.91se91.com/news/index_c.asp" > economic structure < /a > becomes inevitable. Domestic demand gradually increases, and the trade surplus will gradually narrow down. On the other hand, the real estate market problem has not been fundamentally solved. Therefore, in the short term, the economic indicators are unlikely to increase substantially. It is expected that the RMB will continue to depreciate in the second half of the year.

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< p > at present, the RMB expectations in the market have gradually shifted from unilateral appreciation to two-way fluctuation after the early devaluation. Especially in the medium and short term, the market generally believes that the RMB will still suffer from a downward pressure.

In addition to the policy requirements of "steady growth and bottom line", the current RMB exchange rate against the US dollar in the offshore market of Hongkong is still more than 200 basis points in the offshore market, showing that the arbitrage market is still profitable and the two-way fluctuation is still needed to consolidate. Secondly, the Fed's monetary policy has tightened steadily. The recent economic data also show that the fundamentals of the US have further improved, and the US dollar's medium term strength has increased again. Thirdly, foreign investment bank reports show that about 30 billion US dollars have arbitrage in the structural products of RMB in 6.22-6.25. If the RMB depreciates to this position, there will be a large number of stop losses coming out, which will further push down the RMB exchange rate.

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< p > but at the same time, the market is not optimistic about the short term downward trend of RMB.

First, foreign trade is expected to resume favorable balance, which can support the RMB. Two, the sustained and significant depreciation of the RMB will bring a significant negative impact. The unilateral change of RMB appreciation from the unilateral appreciation will not accord with the intention of the authorities to enhance the two-way volatility elasticity of the exchange rate.

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< p > market participants say that under pressure and support, it is expected that the next stage of the RMB exchange rate against the US dollar will enter a stage of weak shocks. Taking into account the policy effect and economic situation, we need a certain period of observation and data validation. This weak pattern will continue to the middle of the two quarter.

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