Where Does The Pressure Of RMB Depreciation Come From?

With the US Federal Reserve raising interest rate to enter the strong cycle, in the past, the low interest rate depreciation, the depreciation of US dollar investment appreciation and the high interest rate emerging market arbitrage story has ended, seeing the cost of borrowing rising. In the past, a large amount of US dollar debt has been returned to us, such as the recent redemption of the US dollar to the US dollar preferential note (Zhong Jun estate), and the early repayment of the US dollar debt principal (Eastern Airlines (600115)).

From an individual point of view, the globalization of asset allocation is irresistible. This will increase the capital account deficit. At present, China's overseas investment accounts for only 7.8% (10 trillion), compared with Japan's 42.2% and Europe's 45.5% gap. In recent years, the demand for overseas assets allocation has already been reflected. Its growth rate has outperformed other assets, and overseas tourism consumption has increased rapidly. Last year, it has reached 107 billion 900 million US dollars, accounting for 71.46% of the service deficit. It has become the main driver of the trade deficit. Due to the increase of per capita income, poor domestic tourism conditions, and domestic and foreign commodity price differentials, this is still growing rapidly.

From the perspective of enterprises, according to international experience, it has entered the stage of net export of foreign direct investment. Enterprises have the ability and demand to enter the international market, such as China's high-speed rail technology system in the leading position of the world, and already have the first-class international competitiveness.

The change of the subjective attitude of the central mama is not a weakness.

First of all, the central mama is not actively interfering, and our foreign exchange reserves still have 3 trillion and 440 billion US dollars, not without ammunition. Therefore, the weakening of the RMB since the end of the year is the result of the central Mama's initiative not to interfere and allow the market to fluctuate. Secondly, the central authorities are guiding the market to change the focus of the exchange rate, shifting from pegging the single US dollar exchange rate to emphasizing a basket of exchange rates. At the end of December, the China Foreign Exchange Trading Center issued a high-profile CFETS RMB.

The index (pegging to a basket of currencies) is exactly what it means.

The rest of emerging market currencies are being derogated (except mid 2014).

The value of the currency depreciated 28%, the US dollar index appreciated by 17%, the renminbi depreciated by 6.7% against the US dollar, and the real effective exchange rate index appreciated by 14%. In fact, compared to a basket of currencies, the renminbi did not depreciate a lot, but it was at a high level. Once again, the yuan dollar's time spent on the second generation of the pants has passed. The RMB has succeeded in joining the SDR, and it is inevitable to decouple from the US dollar. There is no need for two highly correlated currencies in the SDR. For example, when SDR joined the euro in 2001, the German and French francs were eliminated in the same period, taking into account the Sino US relations.

In contrast to the fundamentals of the economy, there is a moderate pullback to the US dollar. Since the US QE quit, over the past year and a half, the RMB has appreciated too much against the US dollar.

In the short term, the lifting effect is limited. Taking into account the global decline in demand for aging and the background of trade rebalancing and squeezing in developed countries, the heroic era of exports has long passed. From the micro perspective, due to the fact that most contracts of foreign trade contracts are locked, the adjustment is lagging even if there is a relative price change in a short period of time. From the perspective of international big data, the depreciation rate has no obvious linear relationship with the export growth rate in the 5 and 10 years perspective.