People's Daily: The renminbi does not have the risk of stall depreciation

Abstract Against the background of the recent strongening of the US dollar, the exchange rate of the RMB against the US dollar fell sharply for two consecutive days. The spot exchange rate on the 26th was even close to the daily limit. Experts believe that the plunging exchange rate of the renminbi is a short-term market turmoil triggered by the depreciation of the euro. In the long run, the renminbi exchange rate is...
Against the background of the recent strongening of the US dollar, the exchange rate of the RMB against the US dollar fell sharply for two consecutive days. The spot exchange rate on the 26th was even close to the daily limit. Experts believe that the plunging of the RMB exchange rate is a short-term market volatility caused by the depreciation of the euro. In the long run, although the RMB exchange rate still has downward pressure, it will remain stable overall.

One-day drop is approaching the “downline”


        The European Central Bank [microblogging] recently announced a bond purchase plan to bring a huge earthquake to the international exchange rate market, the US dollar index was strongly affected by this. The exchange rates of major currencies such as the Euro, the Australian dollar and the Canadian dollar have fallen sharply, and the exchange rate of the RMB against the US dollar has also fallen sharply.

        According to data released by China Foreign Exchange Trading Center, the central parity rate of RMB against the US dollar in the inter-bank foreign exchange market on January 26 was 6.1384, down 42 basis points from the previous trading day, and fell for the second consecutive trading day. base point.

        The spot exchange rate of the renminbi against the US dollar has plunged. After 222 basis points on January 23, it again depreciated 254 basis points on the 26th, setting a new low since June last year. The intraday low fell to 6.2569, a drop of 1.94%, once approaching the mid-price maximum volatility of 2%. However, on the 27th, the deep-down spot exchange rate rebounded by 107 basis points to close at 6.2542.

        In fact, since the central bank increased the fluctuation of the RMB-to-dollar trading price in the inter-bank spot foreign exchange market from 1% to 2% in March 2014, although the trend of two-way volatility of the renminbi has increased, the one-day volatility is so close to the “down limit”. The line is still the first time.

Euro "water release" is the cause

        The market generally believes that the behind-the-scenes push to trigger a sharp fall in the RMB exchange rate is undoubtedly the depreciation wave triggered by quantitative easing in the Eurozone. After the European Central Bank announced the launch of a total purchase plan of 1.08 trillion euros on January 22, the Swiss National Bank immediately announced a decoupling from the euro exchange rate. Central banks such as India, Denmark, and Canada successively announced interest rate cuts, and the domino effect of the currencies of various countries competing to depreciate. Showing up.

        The weakness of the euro directly drove the strength of the dollar, and the renminbi was under great depreciation pressure. Pan Gongsheng, deputy governor of the central bank, said that the quantitative easing policy of the European Central Bank and the normalization of the quantitative easing policy in the United States will further promote the strengthening of the US dollar exchange rate, which may put downward pressure on the exchange rate of the RMB against the US dollar.

        In the view of financial commentator Ye Tan [microblogging], the current round of RMB decline seems to be the result of intention. After the outbreak of the global financial crisis in 2008, in order to avoid the volatility of the RMB exchange rate, the renminbi was linked to the US dollar. Now that the US dollar is riding the dust, the renminbi must refer to other currencies more, so as not to be taller with the dollar. At present, China's economy is in a transitional stage, which is equivalent to another “skinning”. Relatively speaking, it is relatively weak, and the renminbi cannot withstand the risk of high temperatures.

        According to the analysis of the Bank of Communications Financial Research Center, the central bank basically withdraws from the normal foreign exchange intervention, and gradually gets rid of the mode of relying on foreign exchange to supply the base currency, allowing the exchange rate to become the norm according to the two-way fluctuation of market supply and demand. This will not only effectively prevent cross-border arbitrage and arbitrage, but also enhance the effectiveness of domestic monetary policy. In the future, RMB exchange rate fluctuations will be more frequent.

Will remain stable for a long time

        In fact, the renminbi is still the second-largest currency except for the US dollar in 2014. Compared with Europe, Japan and other emerging market currencies, the real exchange rate of the renminbi has continued to appreciate. The exchange rate of the renminbi against the euro has risen to more than 7 in recent days. It was the first time since 2001.

        “There is no risk of stall depreciation like the ruble in the renminbi.” Ye Tan said that considering China’s still more than $3 trillion in foreign exchange reserves and a large amount of assets such as European and US debt, it is unthinkable that the renminbi has fallen sharply to detonate the domestic debt crisis. .

        "When the RMB exchange rate is depreciated in the short term, it will remain stable in the medium and long term." Zhao Qingming, chief macro researcher of the Beijing Financial Derivatives Research Institute [microblogging] believes that although there are many factors affecting the exchange rate, the first is from the economic fundamentals. From the perspective of China's economic growth quality and speed compared with the world, the future will also effectively support the stability of the RMB exchange rate.

        In addition, in recent years, the internationalization of the RMB has accelerated, and the number of countries and regions that have signed RMB clearing and bilateral currency swap agreements with China has reached 12 and 28 respectively, and 169 foreign institutions have entered the Chinese interbank market to invest, so they maintain the RMB. It is important that the value of the currency is relatively stable.

        Lian Ping, chief economist of the Bank of Communications, said that the central bank's 2015 exchange rate target is expected to maintain the basic stability of the effective exchange rate, allowing the yuan to depreciate against the dollar. Maintain appropriate intervention in the foreign exchange market, stabilize the market's expectations of the RMB exchange rate, and promote the overall stability of the exchange rate. We will promote reform of the exchange rate formation mechanism, increase the flexibility of the RMB exchange rate, expand the volatility of the RMB exchange rate, and prudently promote the opening of capital and financial accounts.

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