Foreign Exchange Market: IMF President Supports RMB In SDR

　　 International Monetary Fund (IMF) President Lagarde said on Saturday (November 14th) that the staff of the organization had proposed to include Renminbi in the special drawing rights basket (SDR) of its reserve currency. Lagarde endorsed the proposal.

After Lagarde's statement, the people's Bank of China issued a statement on its website, saying that the people's Bank welcomed the statement by the president of the International Monetary Fund, adding to the IMF staff about the RMB. SDR The analysis and suggestions are appreciated.

Dao Ming securities in New York interest rate Exchange rate analyst Chen Cheng told Bloomberg telephone interview that the support of IMF President Lagarde has increased confidence in the end of the month's entry into SDR.

Although there are no US and Japan in Asia Investment Bank, they believe that the United States and Japan will vote for it. Even if the United States voted against it, the resolution could still pass smoothly.

Although many Chinese and American leaders have not expressed their views on the topic of RMB entering the SDR, they believe that relevant departments are lobbying parties to vote.

Note: after the closing of Friday, Lagarde said in an e-mail statement that IMF staff believed that the renminbi met the requirements of the "freely available" currency and should become the fifth currency after joining the SDR basket after the US dollar, the euro, the pound and the Japanese yen.

Lagarde's position in IMF is just like Yellen's position in the Federal Reserve. Her full support shows the overall style of IMF's entry into SDR.

Although the final result was still a vote, from her point of view, "there should be little problem."

Brendan Ahern, chief investment officer of Krane Fund Advisors LLC, said in a Bloomberg interview that IMF President Lagarde had strong positive significance for the staff report's recommendation that RMB be included in SDR's support statement.

Ahern said that Lagarde's statement did not use the words "if" and "but". It showed a very clear and positive attitude. The market has been waiting for further clarification of the resolution. Of course, the executive board is still required to vote. But with such strong support from the president, it will oppose it. It will be "very unusual". It can refer to the proportion of sub Investment Bank members to decide the final voting distribution.

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According to the latest data from China foreign exchange trading center, the central parity of RMB against the US dollar yesterday was 6.3655, down 27 basis points from the previous trading day. The recovery of the US employment market has increased the probability of raising interest rates. The central parity of the RMB against the US dollar has fallen for 9 consecutive trading days, the longest consecutive 7 consecutive years.

The RMB against the US dollar fell below the 6.37 pass on Friday (November 13th), and ended as a 6.3690 issue. The central parity of the 9 consecutive trading days was 1 and a half months low. In the overseas non deliverable Forex foreign exchange (NDF) market, the latest US dollar / Renminbi variety was 6.5585 at the latest and 6.5550 at the end of Thursday. The latest US dollar / offshore RMB spot in Hongkong is at 6.4035, and the last trading day is 6.3907..

According to Reuters's survey report released yesterday, the position of the renminbi has increased to the highest level since the beginning of September. Although traders believe that the central bank has been affected by a 9 day drop in the central parity price, the purchase of the foreign exchange market has concentrated on the short term to cause short-term pressure on the renminbi. However, analysts pointed out that in the face of the recent accession to the SDR, the Central Bank of China is now meeting the promise of the August exchange rate reform. It has not provided support for the RMB in the middle price link. At the same time, the price difference in the offshore renminbi will not intervene as long as the market is stable at around 300, indicating that the central bank intends to pass the confidence in the exchange rate market when it faces the IMF assessment of RMB entering the blue SDR.

According to a survey released by Reuters in November 12th, the popularity of Asian emerging currencies has worsened in the past two weeks, as expectations for higher interest rates in December increased. The RMB and the India rupee have reached the highest level for two months. According to the survey of 19 fund managers, foreign exchange dealers and analysts, the short position of the renminbi increased to the highest level since the beginning of September. The survey was conducted from Monday to Thursday. The yuan last week created the biggest weekly decline in China's August 11th planned Renminbi devaluation.

Traders said that although the US dollar index was callback, it was affected by the continuous fall of the central price. The accumulated purchase of foreign exchange market had concentrated in the early morning. In recent years, the large exchange settlement has been reduced, and the market intervention has not appeared. After the RMB fell below 6.37, the purchase of foreign exchange increased significantly. But it is expected that the renminbi will not depreciate significantly during the year.

Other traders pointed out that at present, the time or variables for RMB to join the special drawing rights (SDR) is increasing, and the market doubts are aggravated.

Market participants have warned that the market basket is on the rise and there is a growing market anxiety. In the near future, we should be prepared for the increase in exchange rate fluctuations, but we are optimistic about the trend of RMB in the medium and long term.

Changchun, an economist at Nomura in Hongkong, said: "the panic in the foreign exchange market has eased considerably compared with August and September, and the central bank has been more patient in devaluing the renminbi. The weakening of the renminbi is the inevitable result of the strong dollar, and if intervention will only deviate from the market situation. The central bank is now more willing to let market forces take the lead, which is also a reflection of the central bank's confidence in the RMB exchange rate.