Why Did The Yuan Fall After New Year'S Day?

The exchange rate of RMB against the US dollar has dropped more than 500 points in less than three trading days after the new year's day, which has dropped by 0.8%, and the offshore exchange rate has dropped by more than 1000 points, breaking through 6.67.

Why did the yuan fall after new year's day?

First of all, the word "slump" is not accurate. Even considering the recent 3 days of large fluctuations, the average daily fluctuation of the RMB exchange rate is only 0.3%-0.4%, which is a regular fluctuation for the international foreign exchange market. That is, the average volatility of most mainstream currencies can reach about 0.5%. The RMB is not at the extreme volatility at present. Instead, it is gradually returning to the normal state from the extremely abnormal abnormal situation. Enterprises and individuals must prepare for the normal fluctuation of RMB normalization for 200-300 days.

Secondly, the significant depreciation of the RMB after new year's Day is mainly for the stability of the CFETS index. Because the dollar is significantly stronger after the festival, the euro and other non US currencies are falling. If the RMB exchange rate remains unchanged, the CFETS index will rise. In order to maintain the basic stability of the CFETS index, the people's currency will have to depreciate against the US dollar. The middle price has played a role in guiding the market trend to a certain extent, and there is no need to make an excessive interpretation of the middle price.

Again,

Devaluation will not lead to a significant rise in interest rates. The depreciation of the renminbi is not the main cause of the recent rise in bond yields. In fact, the exchange rate is a result of interest rate changes rather than a cause, that is, the exchange rate is driven by spreads instead of interest rates. Therefore, it is not appropriate to assume that the depreciation of the renminbi will end the bull market.

Finally, we should continue to maintain the judgement of RMB depreciation 5%-10% in the year. The specific extent depends on the intervention of the central bank to the market and the stabilization of China's economy.

The continued decline made it easier for the central bank to become more relaxed.

According to the Wall Street news and real-time news, the central parity of RMB has been lowered for 8 consecutive days. Today, the central parity of RMB against the US dollar has hit a new low since April 2011.

As of 14:00 today, the RMB plunged, the offshore renminbi fell nearly 500 points, the offshore renminbi fell against the US dollar at a 6.69 pass, a new low of more than five years; the RMB fell nearly 400 points on the shore, and the RMB fell to the US dollar in the 6.55 pass.

Bloomberg quoted the chief bond analyst of CITIC Securities, who clearly indicated that the central bank appears relatively cautious because of the devaluation of the renminbi and that the central bank's further easing will be difficult to achieve in the short term.

Treasury bonds

It is also difficult to further decline.

The view that "lowering the standard will inevitably lead to a decline in financing costs" is not necessarily true.

He questioned the validity of the reduction and emphasized that the decision on the intensity and frequency of the reserve requirement ratio should be based on a reasonable level of short-term interest rates.