RMB Exchange Rate Elasticity Of Ten Consecutive Down Is Expected To Further Increase

On Thursday (December 17th), the spot exchange rate of the renminbi on the shore dropped against the US dollar by more than 100 points, falling for tenth consecutive days, the first time in the past eight years.

Offshore renminbi fell nearly 400 points against the US dollar, widened to 800 between the two places.

Market participants pointed out that with the increase in interest rate boots landing, the narrowing of the Sino US interest rate may bring even greater.

Pressure, and exchange rate elasticity is expected to further increase, it is expected that the RMB will continue to expand in the short term, but the RMB is more moderate depreciation under the guidance of the central bank. In the medium to long term, the renminbi will continue to stabilize against the trade basket.

On shore, the RMB exchange rate is ten consecutive down.

Beijing time on December 17th at 3 a.m., the Fed opened the first interest rate increase in June 2006, announced the federal funds interest rate increased by 0.25 percentage points, the new federal funds target interest rate will remain in the range of 0.25% to 0.50%, which marks the world's largest economy officially entered the interest rate cycle.

On the same day, the central parity of RMB against the US dollar was set at 6.4757 yuan, down 131 basis points from the previous trading day, which was down for ninth consecutive days.

The RMB exchange rate between the two sides of the Taiwan dollar continued to weaken, and the onshore RMB fell more than 100 points, and fell below 6.48 yuan, closing at 6.4837 yuan, the first ten consecutive decline in 8 years and a new low since June 2011. The offshore renminbi exchange rate touched 6.5236 yuan and fell to nearly 400 points. At 18:40 Beijing time, the offshore renminbi fell 396 points to 6.5632 yuan.

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In terms of influence, Jiang Chao, an analyst at Haitong Securities, predicted that the probability of a weaker dollar in the short term would be high, and that the high interest rate emerging currencies would be breather, and the pound or euro could rebound.

The pressure of RMB depreciation is increasing, the interest rate reduction space is limited, and the reform and pformation are accelerated. In the short run, interest rates should not be stabilized and interest rates should not be cut.

Exchange rate elasticity is expected to further increase.

Some industry insiders worry that the pressure of RMB devaluation will increase with the divergence of monetary policy between China and the United States.

Some analysts said that the narrowing of the US China margin could indeed bring greater pressure on RMB devaluation. It is expected that volatility will continue to expand in the short term, but there is no need to over interpret the volatility.

Lu Zheng commissar, chief economist of Industrial Bank, said that for the renminbi, the "divorce" with the US dollar is imperative, after the RMB index launched by the foreign exchange trading center has declared this point.

After the first increase in interest rates, profits will come to an end. The dollar will be callback, and the renminbi will be able to stay idle to accelerate the revision of overvaluation.

Huatai Securities pointed out that with the increase in interest rates dropped, the renminbi still has room for depreciation, and it is expected that volatility will continue to expand in the short term.

But the renminbi is more moderate under the guidance of the central bank.

In the long term, the central bank still has the bottom line for the exchange rate. Strong trade surplus, capital control and economic growth also mean that the exchange rate has its own resilience.

Therefore, the renminbi, like other currencies, has little chance of a dramatic depreciation of the US dollar.

Zhong Wei, a professor of finance at Beijing Normal University and chief economist of Ping An Securities, also said that there is no need to overread the spread of volatility. Maintaining a nominal volatility in the nominal exchange rate should not be the case.

However, the flexible and two-way fluctuation of effective exchange rate should become the goal of normalization.