The Bull Market In The Year Of The Renminbi Is Facing A Sharp Blow And The Market Tends To Be Calm.

After the Spring Festival, the renminbi rose to the full dollar with the dollar exchange rate. On the first day of the year of the monkey, the biggest one-day gain was achieved in 2005. Although it is not possible to say that the depreciation is expected to dissipate, it will not be able to make a comeback after it is stampeded.

In the delicate time before the opening of the year of the monkey, Zhou Xiaochuan, the governor of the Central Bank of China, has deeply communicated with the market, and the interview of 1.5 million words has answered several hot issues that the market is very concerned about, so as to stabilize the exchange rate expectations. More importantly, during the long holidays of the Chinese new year, the US interest rate hike is expected to continue to weaken, and the international dollar has dropped significantly.

In addition, although the demand for foreign exchange in the market is still high, the fluctuation of the intermediate price is obviously larger than that before the holiday. However, the spot exchange rate of RMB is still orderly and there is no panic.

"Now there are more customers buying foreign exchange, but some customers are asking whether they will get stronger."

One foreign trader said.

Obviously, after the subtle changes in the situation at home and abroad, the expectation of RMB devaluation has already split up, and the wait-and-see sentiment is gradually strong.

Data show that although the RMB against the US dollar immediately followed the middle price on Friday, the trading volume was only 5 billion 500 million dollars at 14:10 Beijing time, which was less than half day trading level of the normal trading day.

The biggest increase in over 10 years on the first day of the first year of the monkey's money has been hesitant. A Reuters poll showed that the US benefited from the gradual increase in interest rates and Europe in 1.2%.

Further easing of policy expectations, most of the emerging Asian currencies in the past two weeks have improved, and the renminbi's bet against the US dollar has dropped to its lowest level since the end of November.

Another observation window that may be temporarily suspended is the change of the Hong Kong Stock Exchange's US dollar / RMB futures contract paction.

After experiencing a continuous rise in offshore CNH, the volume of RMB futures contracts suddenly dropped to more than 6000 from last Friday's trading session to 2574.

Bank traders said that the reduction in the number of renminbi futures contracts should be caused by short positions.

However, the latest report of Han Hui Shi, a foreign exchange expert, said that only the appreciation of the renminbi after the festival could not lead to the conclusion of the short end withdrawal. Only when the bank's surrogate sales and foreign exchange continued to recover its surplus, could the bull market be reheaded.

All day trading is basically carried out above the US dollar / RMB intermediate price, which generally means that the banking system is still in deficit in terms of foreign exchange settlement, and it can not be too optimistic about the future market.

The exchange rate has become the highlight of China's financial stability. Although the improvement of China's economic fundamentals is difficult in the short term, if the external environment improves, it can indirectly ease the expectation of depreciation. Under the premise of maintaining a relatively stable basket of currencies, the weakness of the US dollar will provide a better external environment for the RMB appreciation against the US dollar, but it is somewhat "snail shell".

"The president is very clear, that is to focus on a basket of currencies, increase flexibility, but also consider the reaction of the international market."

A central bank trader said, "anyway, the central bank still has complete control over the RMB exchange rate."

If we look closely at the two fall in the US dollar index since last December, the RMB will show different performances against the US dollar. In combination with the RMB exchange rate index (CFETS index) released by the Central Bank of China last year, we can clearly understand the central bank's "basic stability of the RMB exchange rate for a basket of currencies".

At the end of November, the summit dropped, but the yuan fell against the US dollar and dragged down the CFETS index.

However, in early January this year, the overspeed adjustment of the RMB obviously exceeded the level of the market, and the CFETS index also fell below the 100 threshold. Subsequently, the RMB volatility rapidly contracted, and the spot price reappeared again for more than a month.

During the Spring Festival, the international dollar reappearance ladder fell, and the offshore CNH market also rebounded significantly. It was nearly 600 points hanging against the shore price difference, and the expectation of RMB depreciation was slightly subsided. As the last CFETS day before the holiday (February 5th) fell again to the 100 pass, the rise of the RMB against the US dollar after the festival could maintain the overall stability of the CFETS index.

Therefore, as long as the international dollar trend is not too unilateral, the higher flexibility of the RMB against the US dollar has market conditions, which is what the central bank hopes to build "sponge shield".

High volatility can not only reduce arbitrage, but also the necessary means to train the exchange rate risk management in private sector, and also the basis of the development of the foreign exchange derivatives market.

- governor of the Central Bank of China

China's balance of payments is in good condition, its international competitiveness is still strong, and cross-border capital flows are in normal range. The RMB exchange rate has basically maintained stability against a basket of currencies, and there has been appreciation. There is no basis for sustained depreciation.

He also admitted that some speculative forces are aiming at China recently, but China has the largest foreign exchange reserves in the world and will not allow speculative forces to dominate the market sentiment.

- the latest index of the RMB global index released by Standard Chartered shows that the index fell by 2.1% in December last year, due to a decrease in cross-border RMB payment flows.

The index fell 0.2% last year, the first contraction since 2010.

The market will pay attention to the RMB exchange rate and capital outflow management measures. It is expected that the government will postpone the liberalization of the capital account and internationalize the RMB.

Offshore renminbi interbank lending rates suddenly soared on Friday, and overnight lending rose to more than a month high to 9%, up sharply from the closing market price of CNH. The fixed price of different maturities of the CNH HIBOR also soared and the overnight HIBOR rose to 9.265%. Analysts believe that the sharp rise in the profitability of CNH funds is the result of the withdrawal of liquidity from multiple channels, which is the second soaring since the January 11th offshore liquidity crisis.

Two sources said on Friday that the CAGR.PA of France was planning to issue a five year bond in Taiwan, and that it could start redemption (NC2) at 5% for two years.

The latest article in the China monetary market magazine, which is signed by the China foreign exchange trading center, points out that the CFETS index provides a more marketable direction and quantitative means to observe the RMB. It is an important reference for analyzing and judging the trend of the renminbi. The fluctuation of the RMB against the US dollar in the short run is relatively reasonable for a basket of currencies, and it is more market-oriented.