The Future RMB Exchange Rate Will Become The Center Of Foreign Exchange Reform.

Just as the market is concerned about the deflation of China's economy, the RMB exchange rate has entered a sensitive period. At the beginning of the year of the sheep, the RMB exchange rate has again interpreted the trend of "approaching the limit", which has hit a new low for more than two years. There are divergent opinions about the continuous fall of the renminbi, which raises concerns about the future of China's economy. It is noteworthy that the exchange rate issue is also included in the government work report. On March 5th, Premier Li Keqiang of the State Council made a report on the work of the government, saying that China will promote the marketization of interest rates, improve the interest rate control framework of the central bank, and keep the RMB exchange rate at a reasonable and balanced level, and enhance the two-way floating elasticity of the RMB exchange rate.

In the interview with our reporter, Lu political commissar, chief economist of Xingye Bank (601166, stock bar) said that unlike the previous year's government work report on the exchange rate expansion of "two-way floating interval", this year's "enhanced two-way floating elasticity" means that the future RMB exchange rate intermediate price will become the center of exchange reform.

Because of the weakening of the RMB against the US dollar, the exchange rate issue has aroused renewed concern. On the day before yesterday, Yi Gang, vice chairman of the CPPCC National Committee and vice minister of the people's Bank of China and director of the State Administration of foreign exchange, said that China's economy is basically stable, and that the RMB exchange rate can remain "basically stable on a reasonable and balanced basis". Yi Gang refers to the basic bread. Although China's economic growth has entered the new normal, it is still in the middle and high speed growth, and the trade still has a relatively large surplus. The market asset allocation arrangement also provides the foundation for the stability of the RMB exchange rate. In addition, Yi Gang believes that there is no urgent need to adjust the floating range of RMB 2%.

Zhao Qingming, an expert on international financial issues, said that the central bank will pay equal attention to the management and guidance of exchange rate fluctuations in the future, and adjust the exchange rate through the middle price. Interest rates such as Poland and India have little effect on the RMB exchange rate fluctuations. 2% the daytime volatility has already met the current fluctuating demand of RMB, because 90% of the RMB's daily volatility did not exceed 2%.

Ding Zhijie, a professor at the school of finance at the University of foreign trade and economics, believes that the weakening of the renminbi against the US dollar is not due to the weakness of the renminbi, but rather to the over US dollar. It is not necessary for the market to panic about the normal fluctuation of the RMB exchange rate.

The continuous depreciation of the RMB has caused international investment banks' concern and different views. Stephen Hroch, chairman and chief economist of the former Morgan Stanley region, recently wrote that the depreciation of the renminbi will bring about an escalation of the global currency war.

However, the trend of the renminbi is not the case. According to the bank for International Settlements, the real effective exchange rate of RMB has risen by 26% in the past 4 years. In the 60 currencies it tracks, the appreciation rate of RMB is the first.

Yi Gang said in an interview, "in fact, in recent years, the trend of RMB in the world currency is still very strong. In the last one or two years, if the dollar is the first strong currency, the renminbi can be said to be the top second." For example, he said, the other two major currencies, the euro and yen, depreciated more than 10% against the US dollar in 2014, while the renminbi only depreciated by 2%. "Therefore, the real effective exchange rate and the nominal effective exchange rate of the RMB against the global basket of currencies last year were stronger overall."

Yi Gang gave four reasons for judging the stability of the RMB exchange rate: first, the prospect of China's economic growth is still good. Although China's economy has changed from high speed to high speed in the new normal, GDP growth is still very fast from a global perspective. Two, China's current balance of payments accounts for a relatively large surplus recently. Trade exports are greater than imports. This also constitutes an important basis for the foreign exchange market. The three is the rapid development of RMB internationalization in the past 5 years. Now Asset Management Co and asset managers are willing to allocate more renminbi assets, which means that the global demand for RMB has expanded, providing a stable foundation for the renminbi. Four, both Chinese and foreign enterprises and residents are optimizing their respective balance sheets. This process has also laid an important role in the RMB.

For the external spread of the RMB devaluation doubts, Lu commissar told reporters that the current RMB depreciation It is market behavior, without having to interpret the economic data too much.

Lu commissar said that the recent Renminbi exchange rate The continuous decline is entirely due to market behavior. It is influenced by the strength of the US dollar and is also an amendment to the overestimation of the RMB exchange rate in the early stage. At present, China's exchange rate, interest rate and reserve ratio "three rates" have all entered a downward path. It is not correct to link the depreciation of the RMB with China's "singing air theory".

But unlike many domestic economists, since 2012, the political commissar has consistently insisted on the overvaluation of the RMB against the US dollar and believes that the overvalued exchange rate has diverted precious domestic demand and investment to foreign markets.

According to the evidence, there are more and more people traveling abroad in recent years. One of the reasons for the increase in wealth is that more and more people are finding that the cost of traveling abroad is much lower than that of domestic travel. For example, during the Spring Festival, the cost of traveling to Sanya was much higher than that of Saipan, Thailand and Vietnam.

In addition, more and more Chinese Enterprises Keen to invest abroad, in addition to policy support and settlement facilities, the low cost of foreign investment and home ownership also occupies an important position.

The political commissar believes that as the US dollar enters the appreciation channel, the renminbi weakens against the US dollar, but it is still strong for a basket of currencies. This also constitutes a good opportunity to further deepen the reform. For domestic worries about the depreciation of the renminbi, he thought it would not be necessary. The India rupee is an example. Facts have proved that the depreciation of the rupee has not adversely affected the economy of India.

Lu said that in the past 9 years, the RMB exchange rate volatility is still very low in the 25 main economies of the world. It is only slightly higher than the Hong Kong dollar. The key is that the fluctuation rate of the intermediate price is not enough. Therefore, the core of the future exchange rate reform should be the daily fluctuation of the middle price.