The Era Of Two-Way Fluctuation Of RMB Is Coming.

Some of the emerging market economies are beginning to face the pressure of currency depreciation after the impact of the sharp fall in international crude oil prices. In late December near the end of the year, the renminbi also showed signs of depreciation. In the face of the complex global economic environment, is the RMB still facing devaluation pressure in 2015? How will the interest rate increase of the Federal Reserve affect China's economy and enterprises?

　　 2015 of US dollar: or usher in a big bull market.

Under the situation of economic differentiation, the monetary policy of the major central banks of the world has also been diverged. In fact, the devaluation pressure of the renminbi also comes partly from the strength of the US dollar. The United States has ended the QE and is likely to start raising interest rates in mid 2015, while Europe and Japan are still moving forward. Easing policy On the main road, and monetary policy is likely to be more relaxed, most emerging markets, including China, are also facing pressure to ease monetary policy.

The difference in monetary policy directly leads to the widening of the real interest rate between the US dollar and other currencies, and the US dollar enjoys the advantage of increasing interest rates. Under the conditions of economic cycle and monetary policy cycle, the dollar is expected to usher in the third bull market since the breakup of Breton system.

In China, foreign exchange holdings are much lower than expected. By the end of 11, the figure was only 897 billion yuan, which was reduced by 1 trillion and 600 billion yuan compared with the same period in 2013. This has also become one of the important reasons for the tight liquidity in 2014 years.

The sharp contraction of foreign exchange is due to many factors. The main factors may include: 1) the RMB exchange rate is expected to be strongly reversed, and the settlement of foreign exchange is significantly reduced. At the same time, the central bank has gradually withdrawn from normalization, and the underlying currency has been substantially reduced. 2) foreign investment has increased significantly and the scale of foreign exchange purchase has been larger.

It should be pointed out that the two factors will be changing. Even if the RMB rebounded in 2015 years, it would bring about a rise in the volume of foreign exchange. foreign exchange It is also unrealistic to occupy the money back to the scale of 2013. Therefore, the liquidity pressure caused by the decrease in foreign exchange will still run through the whole year of 2015 years, and the supplement of external liquidity can not be expected.

For the time being, we need not be particularly worried about the impact of the Fed's tightening of monetary policy. Perhaps the Fed's interest rate increase will lead to some outflow of capital, but capital controls and RMB interest rates still have comparative advantages, so that the impact of capital flight may be partial rather than global.

　　 RMB Exchange rate: the arrival of the two-way fluctuation Era

The sharp fluctuation of the RMB exchange rate at the end of the year has allowed the market to take a cool breath. However, as we pointed out in our previous comments, this does not represent a significant change in exchange rate policy, but is consistent with the policy of expanding the floating zone in the first quarter of this year, that is, "maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level and expanding the two-way floating zone of exchange rates".

In the short term, policymakers have yet to prepare for a significant devaluation of the renminbi. The main reasons are: 1) under the pressure of repeated high trade surpluses, the conditions for the depreciation of the RMB are not mature; 2) China's dependence on exports is declining, and the share of China made in the world has been at a high level. At this time, it is unlikely to choose to rely on depreciation to stimulate exports. 3) with the promotion of the strategy of "one belt and one road", the export of excess capacity and cross-border credit are inevitable choices, and a stable exchange rate environment is needed. Of course, due to the lack of elasticity of the RMB against the US dollar, the real effective exchange rate of the RMB has risen sharply under the background of the strong dollar, which objectively requires the RMB to increase its elasticity against the US dollar against the pressure of RMB depreciation.

Therefore, the RMB exchange rate will generally go into a two-way float in the 2015 year, the short-term fluctuation range or 6.05-6.26, the medium term fluctuation range may expand to 6.00-6.35, and the market factor will further increase in the price. When the US dollar is strong, the RMB tends to short term depreciation. When the US dollar callbacks, the RMB tends to stage appreciation. However, this does not mean that the central bank will completely withdraw from the intervention. In addition to continuing to issue signals with the middle price, the central bank will intervene in the market when the market fluctuates extremely. This ensures the stable and controllable exchange rate of RMB.

For enterprises, the unilateral appreciation era that used to close their eyes has ended. The exchange rate risk faced by enterprises has risen sharply. The problem of marking market, choosing products and choosing timing has become a problem that enterprises must face.