Seven Reasons For The Soaring Renminbi

After the end of the two sessions, the renminbi suddenly rose. The yuan rose sharply against the US dollar on Wednesday (March 18th) in the early morning to nearly two months high, and it rose nearly 200 points in the session. After the renminbi rose more than 100 points late on Tuesday, it opened 100 points today.

　　 Suspected intervention by regulators

Market participants speculated that the recent development of Asian investment bank has raised concerns in the United States, and that the International Monetary Fund (IMF) will discuss international events such as bringing the renminbi into a basket of currencies such as the SDR right this year, or that regulators want to push the renminbi forward.

Selena Ling and Emmanuel Ng, an analyst at OCBC, said in a report on Wednesday that Tuesday's offshore and offshore renminbi rose strongly, and suspected that there was a "heavy hand intervention" in the onshore market, which triggered a shorting up.

A foreign trader believes that from the end of the two sessions, the renminbi will begin to rise sharply. The intention of regulators to push up the renminbi is obvious. Of course, there is also a temporary break in the US dollar rally. It may also be that the regulators believe that the current international situation needs to maintain a relatively strong RMB.

　 Dollar callback

As the employment market data continues to grow stronger, most agencies believe that the FED will remove the word "patience" this week. But market participants are increasingly worried about the possible dovish expression of Janet Yellen, which has made the dollar index a notable correction in recent days.

Zhou Shi US dollar index Around 99.55, it was basically flat on Tuesday. The US dollar index has fallen 0.8% over the past two days, setting its biggest two day decline in about a month.

The Federal Open Market Committee (FOMC) will issue a policy statement and quarterly economic forecast on Thursday, 02:00. The chairman of the Federal Reserve will hold a press conference at 02:30.

　　 The Yuan's central parity hit a two week high.

According to the China foreign exchange trading center, the central parity of RMB against the US dollar increased by 0.05% or 29 basis points, at 6.1556 yuan, the strongest since March 6th.

In March 17th, the central parity of RMB increased by 0.05% or 30 basis points, at 6.1585.

Lai Chunmei, a foreign exchange analyst at Bank of East Asia, said that the recent middle price of the renminbi may also reflect the willingness of the competent authorities to stabilize the exchange rate.

　 The government is offering stimulus measures.

　　 China's economy In the past 20 years, the lowest growth rate, the market speculation that the Chinese government may lower the exchange rate to stimulate the economy, but the Chinese leaders cooled the expectation, so the market improved the popularity of RMB.

Chinese Premier of the State Council said on March 15th that if economic growth slows down to affect employment or wages and approach the lower limit of reasonable interval, policy makers will launch. In this case, the Shanghai Composite Index closed its highest level since 2008.

Lin Qiaoji, CO head of research and business at Nong Yin international securities, said that the strong performance of the A share market was a positive signal. Investors expected that more policies would be launched in the next two weeks to promote economic growth. He said the offshore renminbi was oversold, and some investors are liquidating it now.

For the first time in nearly six weeks, the offshore RMB exchange rate is almost the same as the domestic market exchange rate. The offshore RMB exchange rate is 0.04% higher than the domestic market RMB on Tuesday, the first time since February 5th, it is higher than the domestic market exchange rate.

　　 Expand RMB Expected cooling of trading area

Bank of China (Maybank) said that the renminbi rebounded this week, mainly due to two reasons: first, the adjustment of the market position, and then the hot topic of expanding the trading area of RMB.

In June 19, 2010, the people's Bank of China announced the resumption of the exchange rate reform to enhance the elasticity of RMB exchange rate; from March 17, 2014, the central bank continued to expand the exchange rate volatility to 2%, and the central bank continued to dynamically manage and adjust the RMB exchange rate fluctuation in accordance with the floating interval of the announced exchange market exchange rate.

　　 Local debt replacement scheme

Pudong Development Bank said that the narrowing of the price difference between the RMB spot exchange and the central bank's central parity and China's local debt replacement plan eased the credit default worries on the market to some extent, and helped to boost the renminbi's rise today.

The narrowing of these spreads indicates that the market's concern over RMB selling has eased. China's debt replacement program should be conducive to the smooth implementation of infrastructure projects, which is conducive to economic growth and the RMB exchange rate.

　　 IMF revaluation of SDR currency basket

Yi Gang, vice president of the Central Bank of China, said that China is actively communicating with IMF during the two sessions, hoping that it can fully consider the progress of RMB internationalization and make the RMB a basket currency for SDR in the near future. This year, IMF will review the currency basket of SDR for five years.

The Bank of East Asia has said that the IMF will soon reassess SDR and the renminbi will probably join the basket of SDR currencies. The renminbi will probably stabilise in the next quarter and reach the level it hit at the beginning of the year.

Lai Chunmei, a foreign exchange analyst at Bank of East Asia, said that IMF may reassess the basket in May, which may be beneficial to the renminbi, because joining the SDR basket will be another step towards internationalization.