RMB Appreciation Or Depreciation? The Central Bank Of China Confused Analysts.

After the interest rate cut, the central bank raised the central parity of RMB to 6.1320 on Thursday, a 8 month high.

Mitul Kotecha, head of the Asia Pacific exchange rate strategy at Barclays Bank, said that by September 2015, the yuan will depreciate by 2.3%.

UBS also predicted that the renminbi would depreciate, and its chief Chinese economist, Wang Tao, reported in a 26 day report last month that low interest rates and capital outflows would devalue the renminbi to 6.35 in 2015.

On the other hand, because China is promoting the internationalization of the renminbi, some analysts believe that China will not seek to devalue the renminbi significantly.

Wall Street information website has introduced that from Australia to Canada, from Germany to the United Kingdom, China has set up RMB trading centers in the world's major cities to stimulate the circulation and use of RMB in the world, and to further open the capital market through measures such as Shanghai and Hong Kong.

The Chinese government has been avoiding measures like the European Central Bank and the Bank of Japan to stimulate the economy.

Since June this year, only RMB has appreciated against the US dollar in emerging market currencies, although the value of the yuan has depreciated by 2.4% in the first half of this year.

Jason Daw, director of foreign exchange strategy at faxing Asia, said in an interview with Bloomberg on November 24th.

I expect the Central Bank of China may be inclined to let the yuan weaken.

The small depreciation of the renminbi, like the first half of the year, will not go against the internationalization of the renminbi.

Liu Shan, a deputy editor in chief of China business times and a visiting professor at Nankai University, also believes that

The internationalization strategy means that China will not take the initiative to seek RMB depreciation.

This is both RMB.

The strategic demand also needs to fulfill the obligations of great powers in the short term.

In the context of incomplete opening of the capital market, there is a lack of value preservation and value-added tools for offshore RMB assets. If the renminbi seeks to depreciate, it will probably affect the confidence of foreign investors in maintaining renminbi, thereby affecting the strategy of RMB internationalization. China will not disregard the big game in order to get short-term benefits.

Paris Bank of France also pointed out that

Intensified, the Central Bank of China needs to stimulate growth in liquidity and M1 supply.

To achieve this goal, it will be more inclined to reduce the liquidity or to inject liquidity into the banking system than the depreciation of the renminbi.

The Chinese authorities are obviously more inclined to the first two choices.

Last week's rate cut meant the end of China's central bank's directional easing measures, and the fall is coming soon.

Letting the renminbi depreciate is the last choice of the Central Bank of China, but if the yen and the euro continue to depreciate at a faster rate than we expect, China will have more chances to choose it.