RMB Should Be Escorted Internationally With Strong Shocks.

As the two major powers with great influence, Sino Russian trade reduces its dependence on the US dollar, which undoubtedly helps to shake the US dollar's international monetary hegemony.

In particular, the RMB as the settlement currency of energy trade will open a window for the RMB to enter the international energy market. If it can be smoothly promoted, this will be one of the most important achievements of RMB internationalization.

The breakthrough of RMB internationalization in Sino Russian trade is based on two foundations: first, under the joint sanctions of Russia, Europe and Japan, Russia's trade and financial pactions with developed countries are greatly constrained, and the deepening of cooperation between Russia and China is somewhat compelled.

The two is to use the renminbi to export its currency for export, at least in the short term, for Russia.

Looking around the global non US currencies in 2014, it is easy to see that the renminbi is one of the most powerful currencies.

By the end of September, the euro, yen, sterling and Swiss francs had depreciated about 8.1%, 4%, 2.1% and 6.5% respectively against the US dollar this year. The Brazil dollar, Russia ruble, India rupee and South African rand have all depreciated 3.4%, 16.9%, 0.2% and 7.4% respectively against the US dollar.

The depreciation rate of RMB against the US dollar accumulates 1.4% is only lower than that of India, but if we consider that the India rupee will depreciate 11% against the US dollar in 2013, while the RMB appreciation against the US dollar is about 3%, then the overall performance of India rupees is still far less than that of the RMB.

What needs to be concerned is that the international energy market, taking the US dollar as the currency of valuation and settlement, is an important cornerstone of the US dollar's hegemonic position in the world. The entry of RMB means a positive challenge to the international hegemony of the US dollar.

The promotion of RMB internationalization has gradually touched the vested interest groups in the international monetary system.

It is bound to face increasing pressure of fluctuation.

Facing challenges, active adjustment is better than passive adaptation.

As an emerging market currency, whether the RMB can maintain a strong image is the core element of whether the internationalization process can advance smoothly. It is also the key to maintain international prestige under the circumstances of external shocks. However, maintaining a strong strength does not mean a sustained and stable appreciation of the US dollar.

In the next 1-2 years, the "tight" and "loose" monetary policy in the US and Europe will be very significant. Even if the US dollar does not enter the long-term appreciation channel, it will probably be in a strong position at a higher level.

Against this background, only maintaining the relative stability of the US dollar can ensure the strong image of the renminbi. The surplus of our balance of payments and the huge foreign exchange reserves are enough to ensure that this goal is achieved.

Yes

Relative stability does not fluctuate around a certain price, but fluctuates frequently in a wide price range.

The main fluctuation interval of RMB spot exchange rate this year is between 6.04-6.26, and the difference between peak and trough is only 3.7%, but it is the most severe fluctuation since the "7.21" exchange reform in 2005, and has greatly shaken the unilateral appreciation expectation of RMB. This provides psychological basis for the two-way fluctuation of RMB.

In addition, the slowdown of GDP growth in China's economic pition period is hard to avoid, and the market is also prone to produce periodic depreciation expectations in the economic data and international political fluctuations. This provides a better market environment for the two-way fluctuation of RMB.

This year

It shows that the RMB can totally withstand the fluctuation of about 4% in one year, and it can steadily expand the volatility in the future (such as expanding the annual wave amplitude to 5-6%), and strive to raise the frequency of fluctuation and achieve a shift from strong appreciation to strong volatility.

On the one hand, the international market can adapt to the new pattern of RMB exchange rate as soon as possible, and will not cause market panic due to a temporary external shock. On the other hand, it can stimulate the innovation and perfection of hedging instruments in domestic foreign exchange market, expand the breadth and depth of domestic foreign exchange market, and enhance the awareness and ability to resist exchange rate risk from the micro level of enterprises.