The Risk Of RMB Exchange Rate Going Down Should Not Be Ignored.

According to the latest data from China foreign exchange trading center, the central parity of RMB against the US dollar was reported at 6.414 on the 9 day, down 62 basis points from the previous trading day, setting a new low in recent years.

RMB's accession to the SDR basket of currencies is an important watershed. As the difficulty of China's economic pformation has increased further, and the macroeconomic data is not optimistic, the downward trend of the RMB exchange rate has accelerated recently.

What we need to guard against is that once we break through the core obstacles, it will be easier to break the positions afterwards.

There is an expectation that the RMB exchange rate will continue downward.

In December 9th, in the offshore RMB market, the yuan fell to 6.5 against the US dollar. The intraday market fell rapidly and fell by more than 200 basis points. The exchange rate once fell below the 6.51 threshold, hitting 6.5116 at the lowest level and refreshing its 4 month low.

Since the RMB was introduced into the SDR in November 30th, the offshore renminbi has fallen by more than 400 points against the US dollar.

The offshore market is expected to have lower forward expectations, and the 1 year US dollar / RMB non deliverable forwards will be RMB 6.6945 yuan.

It can be said that the offshore market is now pulling down the RMB price in the onshore market.

Unlike before joining the SDR, the central bank seems to be less firm in maintaining stability.

In December 8th, the central parity of RMB against the US dollar was 6.4078, and in December 9th it was 6.414. The intermediate price fell to the 6.41 pass for the first time since the new exchange reform in August 11th.

This shows that the central bank does not want to spend too many dollars to maintain the renminbi at a high level, but let the middle price follow the market changes.

It can not be ruled out that on special days, the renminbi will concentrate on the blow up, as in December 4th, when the European Central Bank cut interest rates and the euro suddenly rises, but the medium and long term trend of the RMB is not optimistic.

Since August 11th, the yuan has depreciated about 3.4% against the US dollar.

In November 30th, IMF announced that the renminbi was included in the basket of SDR currencies, and vice president of the central bank.

The Chinese government will continue to maintain a basically stable RMB exchange rate at a reasonable and balanced level and will intervene only when volatility is too high.

This means that the central bank will tolerate a downward trend in the RMB exchange rate within a certain range.

Enterprises respond to the US dollar interest rate increase.

The rise is bound to reduce US dollar borrowing.

Data from the International Bank of clearing (BIS) showed that in the three quarter of this year, offshore net borrowing in emerging markets dropped to $1 billion 500 million, a sharp decrease of 98% from the previous quarter, a sharp decline since the financial crisis in 2008. The global debt issuance in the three quarter also decreased by nearly 80%, while the number of euro debt issuance rose from 18% in the two quarter to 62%.

Because RMB internationalization needs paction and credit, the RMB can not be substantially depreciated like Brazil, Real. But considering China's economic data, the risk of RMB exchange rate going down should not be ignored.

In December 8th, the data released by the General Administration of Customs showed that the total value of imports and exports in China decreased by 7.8% from 1 to November this year, while exports and imports fell by 2.2% and 14.4% respectively.

The trade surplus of 3 trillion and 340 billion yuan, an expansion of 63%, but this recession surplus can not hide the rise of China's manufacturing costs and the decline in exports.

Active in recent years

The amount of domestic consumption has been reduced, and the strong renminbi is conducive to cross border consumption of the middle and high-income groups. This is considered not conducive to the upgrading of China's manufacturing industry.

In November 3rd, the free travel service platform, beehive travel network, today's headlines and Bank of China card center jointly released the global tourism shopping report 2015. This shows that 53.6% of Chinese tourists this year ranked shopping as the main purpose of free travel. On average, each Chinese traveller spends more than half of their travel expenses on shopping, and the average cost per person is 5830 yuan, up 16.3% over the same period last year. The overall scale is 684 billion 100 million yuan, far exceeding the 240 billion scale of the "Hai Tao" market.

Another important reason for the recent decline in the RMB exchange rate is to raise interest rates in the US dollar.

If the Fed raises interest rates in December, it means that the US dollar will continue to rise. If the renminbi maintains a certain degree of weakness before the appreciation of the dollar, it will help to make the renminbi hit the iceberg.