Focus: RMB Will Not Fall Into The Depreciation Cycle

After P sang to the US dollar, it has been singing low rhythms lately.

Data from the China foreign exchange trading center showed that the central parity of RMB against the US dollar in April 4th was 6.1557, down 37 basis points from the previous trading day.

Whether the renminbi has fallen into the depreciation cycle since then? Experts say that the rise and fall of the RMB is the inevitable experience of the exchange rate marketization. The depreciation is a short-term fluctuation. In the medium to long term, China's economic fundamentals are good. Compared with other countries, the spreads are still large.

< /p >

< p > < strong > 1 < < a href= > > > http://www.91se91.com/news/index_c.asp > > /a > the biggest decline is /strong > /p >.

< p > according to statistics, from January 14th to April 3rd this year, the spot exchange rate of RMB against the US dollar was 3.25% (1964 points).

In March 21st, it hit a new low of 1 years (6.2370).

After that, the devaluation stopped and rebounded once and for all.

However, the last 1 weeks have returned to calm.

As of April 3rd, the intraday fluctuation of the spot exchange rate against the US dollar was less than 200 points.

< /p >

< p > statistics show that the RMB depreciated by 2.64% in the first quarter, almost all of the appreciation last year. This is the largest and longest cycle of depreciation since 2005.

< /p >

< p > "the recent devaluation of the RMB has something to do with our worries about China's economy.

Although the economic downturn is not serious, the market is expected to be a little exaggerated.

The director of the Research Office of the Financial Research Institute of the Chinese Academy of social sciences has just said in an interview with our reporter.

< /p >

< p > in addition, there are also analysts who believe that the US Federal Reserve cut QE and the expected increase in interest rates ahead of time, so that the US dollar is strong, so the renminbi has depreciated. Others say that the depreciation reflects the central bank's intentions.

As the RMB continued to increase for 9 years, it has attracted a large number of international hot money to carry out foreign exchange arbitrage. After the expansion of the RMB exchange rate with the dollar, the arbitrage cost of these funds has been increased. At the same time, the central bank also has the expectation of guiding the two-way fluctuations in the formation of the RMB and supporting the economic consideration.

< /p >

< p > < strong > 2 < a href= "http://www.91se91.com/news/index_c.asp" > two-way fluctuation > /a > replace unilateral appreciation < /strong > /p >

< p > with the continuous advance of exchange rate marketization reform, RMB is gradually changing from unilateral appreciation to two-way fluctuation.

Liu Dongliang, senior analyst at China Merchants Bank's financial market, pointed out that the RMB exchange rate is moving from the "interval + crawling" mode to the "interval + floating" mode.

< /p >

"P >" RMB exchange rate is the inevitable process of exchange rate marketization. It is impossible to rise or fall and will fluctuate in two directions.

Therefore, do not over interpret the current round of decline.

Zeng just pointed out.

< /p >

< p > Liu Dongliang said that in the "interval + floating" mode, the middle price is still the benchmark, the exchange rate volatility has increased to 2%. The monetary authority has quit normal intervention, and the market has significantly increased its influence on prices. Because the market and monetary authorities are all price makers, the rate of exchange rate volatility has increased significantly.

< /p >

< p > from 2007 to now, the central bank has expanded the RMB exchange rate fluctuation interval for the three time. The purpose is to further enhance the two-way floating elasticity of RMB exchange rate and establish a managed floating exchange rate system based on market supply and demand.

In fact, devaluation is also a good thing, which can split the expectation of unilateral appreciation of RMB and facilitate marketization.

Experts point out that two-way fluctuation is a real market, which is conducive to finding reasonable prices, and more conducive to the optimal allocation of domestic and foreign resources.

< /p >

< p > < strong > 3 remained stable at a reasonable level < /strong > < /p >

< p > although the renminbi is declining now and then, it will stabilize in the future.

Wen bin, director of macroeconomic research at the Bank of China International Financial Research Institute, said that with the increasing role of the market in determining the RMB exchange rate, the RMB exchange rate against the US dollar broke into the "5" or "small probability" event in the year, and it is expected to present a two-way fluctuation trend of "depreciation appreciation revaluation" in the 6 years.

< /p >

< p > "the Fed's optimistic attitude towards the US economic growth will remain unchanged, and the scale of the debt reduction will be carried out on schedule. The US dollar exchange rate index will gradually become stronger throughout the year and the pressure of RMB appreciation will gradually reduce". Wen bin analysis said that whether China's economy can achieve a soft landing is the fundamental internal cause for the RMB exchange rate trend.

GDP growth is expected to pick up in the first three quarters, down in the fourth quarter and increase by around 7.4% throughout the year.

The RMB exchange rate will also fluctuate with the macroeconomic trend.

< /p >

< p > Liu Dongliang believes that in the short term, the trend of the RMB exchange rate mainly depends on the realisation of the US dollar, the economic data, and the propaganda of the monetary authority. In the medium term, the real interest rate difference between the RMB and the US dollar will remain at an attractive level, which determines that the RMB will still have a strong momentum of appreciation in the medium term.

It is expected that RMB will still have room for 3%~5% appreciation within 6~12 months, that is, there is still an opportunity for innovation. After 6~12 months, the monetary policy of China and the United States will probably change, and the real interest rate between China and the United States will gradually narrow, and the momentum of RMB appreciation will tend to weaken.

< /p >