The Market Expects That The Central Bank Of China Will Relax The Floating Range Of Exchange Rate.

Investors predict that the Central Bank of China will continue to relax the daily floating range of RMB against the US dollar and pave the way for further devaluation of the renminbi.

　　 RMB There are two different exchange rates, depending on whether they are trading in or outside China. Traders are concerned about offshore exchange rates because they are more open to overseas investors and are less constrained by Chinese official control.

When the offshore exchange rate is lower than the spot exchange rate, it usually indicates that the demand for RMB from overseas is down, or it may be a sign that investors think the Chinese government will lower the official exchange rate.

The people's Bank of China sets RMB daily reference. exchange rate And allow the real exchange rate to fluctuate by 2% on the reference exchange rate. Market speculation around the yuan is stronger against the global market. currency The latest evidence of greater pressure is put forward. Central banks around the world have also recently been fighting to reduce interest rates, devaluing their currencies in an attempt to counter the slowdown in economic growth.

Russia's central bank unexpectedly announced a reduction in its main interest rate on Friday, which led to the revaluation of the rouble. The day before, the Danish Central Bank further lowered its negative interest rate in order to ease the pressure on the currency to appreciate against the euro.

Win Thin, head of foreign exchange strategy at Brown Brothers Harriman global emerging market, said investors bet on further devaluation of the renminbi.

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In addition to the ECB, only India, Japan, Singapore and other countries in Asia have further stepped towards easing.

In January 28th, the HKMA lowered the slope of the monetary policy zone and relaxed the policy unexpectedly. Affected by the news, Singapore's Asian stock market fell 1%, the biggest decline in 3 and a half years. The Singapore monetary authority has said that it will maintain a moderate and gradual appreciation of the policy exchange range, but it will lower the slope of the monetary policy zone and join the global "water drain" to fight deflation risk and support the economy.

In January 21st, the Bank of Japan maintained a large-scale monetary stimulus policy and continued to expand the scale of the basic currency by buying bonds and risky assets at a rate of 80 trillion yen (US $676 billion) per year. At the same time, the central bank has extended the two loan schemes originally due in March for one year, allowing banks not to open accounts in the central bank to participate in the existing loan schemes. The two plans are designed to encourage Japanese banks to increase lending.

In January 15th, the Central Bank of India announced that it would cut the benchmark interest rate by 25 basis points to 7.75%. This is the first time that the bank has cut interest rates in the past two years. The Bank of America expects that the Central Bank of India will cut interest rates again by 50 basis points between April and September this year.

Jiang Shu pointed out that the quantitative easing of central banks, especially the huge easing in Europe and Japan, pushed up the US dollar exchange rate. More importantly, the recovery of the US economy and the trend of recovery will continue, supporting the strong dollar. The whole financial market will focus on the US economic recovery and the strong dollar theme in the next two or three years.

Peter Hooper, chief economist at Deutsche Bank, believes that for the next time, the theme of the foreign exchange market will continue to be stronger, and the US dollar rally will probably continue for 2 to 3 years.

Jiang Shu stressed that the strengthening of the US dollar will impact the non US currencies, and the Renminbi should not be an exception. However, the RMB is more than the deficit. The depreciation rate is much smaller than the Japanese yen and the euro. It is estimated that the RMB exchange rate against the US dollar will depreciate between 4% and 5% in the period of strong US dollar. The possibility of a significant depreciation of the renminbi is small, but the future volatility may be strengthened.