Central Bank Uses New Mode To Guide RMB Exchange Rate

In recent years, the yuan has continued to depreciate against the US dollar.

Bank of America, Merrill Lynch pointed out that although the depreciation of the renminbi against the US dollar has something to do with the strength of the US dollar index, there is evidence that

Trying to steer the renminbi against the US dollar to reduce the appreciation of the renminbi against a basket of currencies.

On the shore, the RMB closed against the US dollar at 6.5519, down 0.13% from the closing price of the previous trading day, down 0.04% from the closing night of the previous trading day.

Over the past week, the renminbi has continued to fall against the US dollar.

Last Thursday, the central parity of RMB dropped by 315 points to 6.5531, the lowest in 3 months.

At the same time, the renminbi is being traded against a basket of currencies.

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In May 20th, the CFETS RMB exchange rate index rose to a new high of 97.35 in the five week, up 0.37 from last week, rising for second consecutive weeks.

James Seddon, an analyst at Merrill Lynch and Merrill Lynch, said in a research report that the recent depreciation of the central parity of the RMB against the US dollar is related to the strengthening of the US dollar index. There is evidence that the Central Bank of China has tried to reduce the appreciation of the renminbi against a basket of currencies.

He pointed out that when the dollar was strong, the bank set a bigger price for the central parity of the RMB against the US dollar.

To achieve the goal of reducing excessive basket appreciation.

He pointed out that judging from the adjustment of the CFETS exchange rate index implied by the fluctuation of the international foreign exchange market overnight, the actual increase in the index reflects only 68% of the adjustment.

Zhang Ming, director of the International Investment Office of the world economic institute of the Chinese Academy of Social Sciences, wrote this month that the "asymmetric depreciation" mode means:

When the US dollar index is stronger, the renminbi will choose to look at the CFETS basket and let the RMB depreciate against the US dollar. When the US dollar index weakens, the renminbi will choose to basically peg the US dollar (or rise slightly against the US dollar) and let the renminbi depreciate against the CFETS basket.

Seddon expects that the offshore renminbi will depreciate to US $7 against the US dollar at the end of the year, while the CFETS RMB exchange rate index will depreciate further by 3.5%.

Wall Street has mentioned that the central bank is guiding the RMB exchange rate through the new pattern of "asymmetric depreciation".