May Sharp Rebound In Renminbi, Leading To "Bottoming Out" Speculation

We can refer to the similar situation in 2012, when the RMB depreciated for nearly four months, and the intra day trading price also touched the 1% limit price several times. But after that, the RMB exchange rate has returned to the trend of appreciation. Analysts pointed out that it is too early to judge the bottom, because the same depreciation, the current fundamentals are quite different from the past.

In the first two trading days this week, the renminbi rebounded to more than 300 points against the US dollar and almost recovered all the April declines. "The RMB rebounded in May and reversed the trend of a sustained depreciation of the renminbi at the end of April. It may still be affected by the devaluation of the US dollar," said the head of a large state-owned foreign exchange business. "From a technical point of view, the exchange rate of the US dollar against the RMB at the end of 4 will deviate from the MACD index, indicating the possibility of short-term RMB bottoming."

"Because the current RMB devaluation is mainly led by the policy side, and the central bank's goal and normal intervention have decided the devaluation extent and the time span, and the human factors are not good enough to guess. Of course, I still insist on the original view that the continued depreciation of the RMB is unlikely, and the fundamentals will continue to bullish the renminbi, because the trade surplus will continue and interest rate trading will not disappear. " The foreign exchange supervisor said.

Liu Dongliang, a senior analyst at China Merchants Bank's financial market, pointed out that "rising or demotion is a two-way fluctuation", but it is still early to conclude whether the exchange rate is devalued. Personal judgment, the 2 quarter of the 3 quarter, the probability of turning point is quite large, but the specific time and price can not be judged now.

"The key is to see whether the central bank will continue to guide the depreciation of the exchange rate in the 2 and 3 quarters. If it is not guided, then the appreciation is a great probability," Liu Dongliang said. "And whether the Central Bank continues to guide the exchange rate, it may depend on whether the Chinese economy has obvious stabilizing signals in the 2 and 3 quarters."

Another senior foreign exchange trader of a listed city commercial bank pointed out that the renminbi exchange rate is unlikely to return. After the rapid devaluation of the early stage, the strength of the buyers and sellers in the market is changing faster, and the two-way fluctuation characteristics are more obvious. It is noteworthy that the overall market is cautious, following the trend is more serious, easy to rise and fall, but the overall direction is not clear.

"There is still room for depreciation if individuals are biased. If we want to start revaluation, we should have a better economic fundamentals in the second half of the year." The trader said.

* * repeating the trend of devaluation in 2012? * * *

Although it is time for us to guess whether the current round of depreciation will come to an end, we may be able to spy on one or two in comparison with the devaluation of the renminbi in 2012.

Looking back at 2012, the international and domestic situation changed significantly. From the middle of May 2012 to the beginning of September, the RMB continued to depreciate. The RMB had hit 6.39 low against the US dollar, and the intra day trading price touched 1% limit price many times.

At that time, the depreciation of the RMB forward market was further strengthened. The NDF price of the RMB against the US dollar in the 12 months was over 1000 basis points at the spot rate.

In late July 2012, the fluctuation range of RMB against the US dollar expanded from 0.5% to 1%. By September, the exchange rate bottomed out. In mid March 2014, the fluctuation range of RMB against the US dollar was expanded from 1% to 2%, and whether the exchange rate would hit bottom in May?

"In 2012 and this year, the exchange rate has also experienced depreciation, but the mechanism is different. In 2012, it was mainly due to the rapid deterioration of the domestic and international economic environment. It was the spontaneous depreciation of foreign exchange caused by the spontaneous purchase of foreign exchange, and it was obvious that the central bank was relatively resistant at the time," said the senior foreign exchange trader of the city commercial bank.

The head of a major foreign exchange transaction pointed out that the current RMB devaluation is mainly guided by the central bank's initiative to take advantage of the situation, and in 2012 it passively accepted the depreciation of the RMB exchange rate in the past 4 months.

Some experts and scholars also agree with the central bank's role in the depreciation of the current exchange rate. Yu Yongding, a member of the Chinese Academy of Social Sciences, recently wrote that the depreciation of the renminbi in the first quarter of this year was mainly the result of intervention by the central bank. But from now on, China's "double surplus" situation will not change. Under such circumstances, the depreciation of the renminbi will not become a long-term trend.

The yuan weakened significantly against the US dollar after hitting 6.0406 of the new exchange rate reform in mid January 2014. By the end of February, the market had begun to waver in its ability to maintain its unilateral appreciation. Last Wednesday (April 30th), the yuan reached a 18 month low of 6.2676 against the US dollar, calculated at 6.2593 of the closing price of the day. The cumulative depreciation rate in the year was nearly 3.3%. In 2013, the yuan was against the US dollar. appreciation No more than 3% (2.91%).

Guan Tao, director of the balance of Payments Division of China's safe, said that the recent change in the level of the RMB exchange rate should not be viewed in isolation. exchange rate The combination of floating interval reform and capital flow has more and more influence on the balance of payments, which also makes the RMB exchange rate have a two-way market base.

Guan Tao stressed that we should take a common view of the two-way fluctuation of the RMB exchange rate and actively manage the risk of RMB exchange rate fluctuations. With regard to the fluctuation of RMB exchange rate, the market is only undergoing adaptive adjustment without panic, and the foreign exchange market has maintained a smooth operation. The difference between the domestic and foreign RMB exchange rate has narrowed sharply and shows a two-way change.

The traders of the above cities pointed out that Central Bank It is proposed to withdraw from normal intervention, but if the market expects the exchange rate to be kept unilaterally, this "exit" can not be realized. Now it is obvious that the central bank has done so. The market expectations are obviously divided, and the enterprises' opinions on the exchange rate market are quite different.

According to a questionnaire survey conducted by the Central Bank of China in the first quarter of 2999 export-oriented industrial enterprises, the expectation of RMB appreciation is weakened. 33.1% of enterprises expect RMB to depreciate in the next half year, a 25.3 percentage point increase over the previous quarter, and 66.9% of enterprises expect to appreciate in advance.

Of course, some economists are worried about this, because after 4 months of devaluation, and over 6 of the enterprises expect the RMB will eventually appreciate, and analysts are generally optimistic about the long-term trend of the renminbi, and the central bank's bottom line is likely to be used by arbitrage.

Earlier, Liu Yuhui, chief economist of GF Securities, pointed out that the bottom line of growth protection is very difficult for the central bank to get away from the intervention and even do not rule out the future central bank's habit of intervention being captured by the procedural exchange, thus designing a more efficient trading strategy and making profits. In short, in a sense, the bottom line guarantee is the biggest obstacle to the flexibility of the RMB exchange rate.