Why Does The Yuan Do Not Fear The King Of The Dollar?

One of the traders at a domestic bank said that the Central Bank of China was once again found buying Renminbi today, which made some people recently short of Renminbi panic. Some of them were forced to stop losses.

In the past month, the Central Bank of China has been intervening in the market, hoping to block investors, especially offshore investors.

As China's economic growth slows, offshore investors are betting on devaluation.

Offshore market, the 1 year US dollar / RMB non deliverable forwards 6.3506 yuan, five last week reported 6.3785 yuan.

Traders pointed out that

Trading is relatively light, but in the afternoon, China's major banks have increased their strength in settlement. The narrow trend of consolidation has been broken, and then the appreciation trend starts immediately.

According to the data released by Hongkong Finance Association, the fixed price of US dollar / Renminbi (Hongkong) spot exchange rate in March 30th was 6.2096/6.212.

"Intra day market" is still relatively heavy. Most of the afternoon is in offer, and now offshore.

Basically, there is no arbitrage cap, and the impact of settlement demand on the market is reflected, "said a trader in a city commercial bank.

Traders explained that offshore renminbi rose slightly within days.

At the same time, we can steadily increase on the strength of the foreign exchange settlement, but if the exchange rate is high and offshore is not moving, if the spread between the two places is large enough to arbitrage, the immediate increase will be made in the territory.

Traders pointed out that the operation volume of the big banks has been significantly reduced recently, and the demand for foreign exchange purchase from the customers has also declined. The actual trading is relatively light, and the actual fluctuation of the entire disk is only about 20 points.

Last week, the offshore RMB in the five round of the US dollar quickly fell to the 6.22 barrier in the strong US dollar, and the spot price spread between offshore renminbi and domestic territory once expanded to about 80 points. However, after the US dollar pullback, the offshore RMB exchange rate rebounded rapidly.

The price difference between the two places almost disappeared on Monday morning.

Traders also said that the cost of shorting the renminbi offshore is relatively high. If there is not a larger profit margin, the parties are still relatively cautious. The current trend of empty renminbi is not a special advantage, so if there is a short-term gain, the profit will be higher.

On the basic level, CICC expects that the RMB may be included in the SDR (Special Drawing Rights) expectation in the short term, and the appreciation of RMB will bring some appreciation pressure.

If expectations are fulfilled, the pressure will be further strengthened, but if it fails, exchange rate or short-term adjustment will be achieved.