There is no room for substantial depreciation of the RMB exchange rate
there is no room for substantial depreciation of the RMB exchange rate
October 12, 2018
on October 10, the central parity rate of the RMB against the US dollar was reduced by 53 basis points to 6.9072, falling for seven consecutive trading days. Experts believe that there are sufficient conditions for the RMB exchange rate to remain basically stable at a reasonable and balanced level, and there is no room for depreciation after a few sharp repetitions.
Wen bin, chief researcher with pulley blocks at both ends of the movable gripper seat of China Minsheng Bank, said in an interview with Securities yesterday that at present, the global economic growth is unbalanced, resulting in the global monetary policy cycle being out of sync. Therefore, against the background of continuous interest rate hikes by the Federal Reserve, the US dollar index has an upward trend, and both the RMB and non US dollar currencies are facing the pressure of depreciation. Since this year, the RMB has depreciated by 6.26% against the US dollar, but the RMB has depreciated by 2.36% against a basket of currencies. It can be seen that the RMB is relatively stable relative to other emerging market currencies. Referring to the next step of RMB exchange rate trend, Wen Bin said that on the one hand, at present, China's macro-control policies are in place, domestic demand continues to expand, and it is expected that the macro economy will still operate in a stable range in the fourth quarter. The fundamentals of China's economy are the premise and basis for determining the RMB exchange rate. With the opening of China's financial market, more international investors are willing to enter China's capital market. On the other hand, at present, China's international balance of payments is generally balanced, and cross-border capital flows are also balanced. Therefore, the RMB exchange rate will fluctuate in both directions at a balanced and reasonable level, and there is no room for substantial depreciation. Mingming, chief fixed income analyst of CITIC Securities, told Securities yesterday that since the second half of this year, the fluctuation of the RMB exchange rate has increased significantly, which may lead to the technical decline of the RMB exchange rate, which is used to measure the chemical properties of materials, that is, the chemical composition breaks the psychological threshold of "7". However, there are differences in the current monetary policies between China and the United States. The depreciation of the RMB exchange rate is not only the result of the differences in monetary policies between China and the United States, but also conducive to boosting exports to a certain extent, thereby hedging the downward pressure on the economy. however, with the improvement of people's quality of life, it is noteworthy that on October 7, the central bank announced that from October 15, the RMB deposit reserve ratio of large commercial banks, joint-stock commercial banks, urban commercial banks, non County Rural Commercial Banks and foreign banks would be reduced by 1 percentage point to replace the medium-term lending facilities due on the same day.
Xu Yang, chief Macro Analyst of zenith finance, told securities that this RRR reduction has made up for the liquidity gap in the banking system and optimized the liquidity structure. Money has not been relaxed, the market interest rate is stable, and the growth rate of broad money (M2) and social financing scale basically matches the growth rate of nominal GDP, which is reasonable and appropriate, so it will not form a strong depreciation pressure on the RMB exchange rate.
"This RRR reduction is conducive to promoting economic structural adjustment, promoting high-quality development, and the support of the economy to the RMB exchange rate is more consolidated. As a large developing economy, China's exports are highly competitive. At the same time, China's economy is dominated by domestic demand, with a complete range of manufacturing industries, a relatively complete industrial system, a moderate degree of dependence on imports, and sufficient conditions for the RMB exchange rate to remain basically stable at a reasonable and balanced level." Xu Yang said