Without Fear Of The Dollar, Will The Renminbi Become A "Safe Haven"?

The appreciation of the RMB against the US dollar in the past 3 months was 1%, much better than that of the 6.2%, 4.8% and 2.7% of the won, the rupiah and the India rupees.

"The renminbi has proved its position as a safe haven in the background of the strong dollar and will continue to play such a role," Darius Kowalczyk, economist at Credit Agricole, said in the report.

French agricultural credit believes that there are three factors to support the strengthening of the renminbi: a record trade surplus, a surge in demand for offshore assets under the premise of gradual liberalization of capital account, and demand for storage and payment intermediaries.

Kowalczyk said: "the main reason why we are optimistic about the prospects of the renminbi is that China's record trade surplus level has rebounded strongly after the fall in last winter and early spring."

The bank expects China's this year's

It is expected to reach a record $377 billion, and the surplus will reach US $274 billion in the second half, accounting for 73% of the total annual surplus.

How strong can the renminbi go?

Kowalczyk predicts that the yuan will rise to 6 against the US dollar by the end of the year, which is 2% higher than the current exchange rate.

"China's huge trade surplus.

The strong inflow and internationalization process will further push up the price of RMB exchange rate to the upper edge of the fluctuation range.

Kowalczyk added: "at the same time, as China's export growth is strong and domestic demand is increased, the central bank's acceptance of RMB appreciation is increasing, and it is expected that the yuan will continue to rise."

The Central Bank of China controls the renminbi through the daily determination of intermediate prices and trading ranges.

Since March 17th, the floating rate of RMB against the US dollar in the foreign exchange market has expanded from 1% to 2%, and the difference between the US dollar maximum spot selling price and the minimum spot purchase price of the foreign exchange designated bank is not to exceed that of the current exchange rate, from 2% to 3%.

Differences still exist

However, Hamish Pepper, a strategist at Barclays, believes that the renminbi will not continue to appreciate.

Hamish Pepper said: "considering that China's economic growth is weakening, and that the central bank is loosening monetary policy in a directed manner, it seems unreasonable that the RMB can continue to go up in real terms."

The bank expects that the yuan will fall to 6.23 yuan against the US dollar at the end of the year, which will depreciate by 1.6% compared with the current price of 1 yuan.

"We believe that the depreciation of the renminbi will become part of the government's economic policy to stimulate growth," he said.

Barclays Bank last month lowered its economic growth forecast for 2014 to 7.2%, originally 7.4%.

The bank expects the Central Bank of China to cut interest rates in the coming months, and will adopt additional directional easing measures to stimulate economic growth.