Ampang: China Should Allow The Renminbi To Depreciate Appropriately.

< p > > a href= "http://sjfzxm.com/news/index_c.asp" > G20 > meeting /a > has ended. Unlike the market expectations, the conference did not accuse Japan of vigorously promoting the depreciation of the yen and easing monetary policy. It only tactfully indicated that it would suppress the competitive currency devaluation of all countries. Therefore, some market participants accuse the G20 meeting of being a weak meeting, and Japan, instead of being named, became the biggest winner of the conference. < /p >
< p > it is certain that Japanese Prime Minister Abe Shinzo will continue to push forward its radical loose monetary policy. While implementing its commitment to raise inflation target to 2%, Japan's central bank will also urge the Bank of Japan to take an unlimited amount of cash measures to stimulate the economy. In fact, in 2012, the Bank of Japan has implemented 5 quantitative easing measures, and the purchase of assets has also expanded from 5 billion 500 million yen in early 2012 to the current 101 trillion yen (about 1 trillion and 80 billion US dollars). Now the market generally expects that the yen will depreciate to more than 100 yen against the US dollar. In the eyes of Abe Shinzo, a think-tank scholar of Ampang, Japan is doomed to become a tough Japanese Prime Minister with strong political and economic strength. He strongly pushes Japan's "national normalization" politically and militarily, and promotes the Japanese yen to depreciate sharply. < /p >
< p > the Andouble administration has strongly promoted the radical "a href=" http://sjfzxm.com/news/index_cj.as "monetary policy" < /a >, which has played a certain role in the Japanese economy. Under the sharp depreciation of the yen, Japanese stocks took the lead and became the beneficiaries. From the beginning of last October to February 18th this year, the Japanese yen has fallen from 77 yuan to nearly 94 yuan against the US dollar, and its depreciation rate has reached 22%. At the same time, Japanese stocks rose and the Nikkei 225 index rose nearly 29.7%. For some of Japan's most important manufacturing sectors, the benefits of the yen's depreciation have also been reflected. Taking TOYOTA motor as an example, it not only regained the world's number one throne, but also made an increase of 35 billion yen in TOYOTA's profits every 1 yuan. < /p >
"P", although Germany and other countries have previously criticized the Japanese currency devaluation policy, but from the weakness of the G20 conference, the European and American central bank that also printed "water release" will not impose strong restraint on the Bank of Japan, which means that the tide of a competitive currency devaluation can appear this year. < /p >
What's the impact of this situation on China's market? How will China respond to it? In January this year, ampong researchers warned China how to protect itself in the global monetary war, and it will become a severe test for the new leadership. < /p >
< p > domestic research institutions believe that < a href= "http://sjfzxm.com/news/index_s.asp" > Japanese yen depreciation "/a" has little impact on China's economy. CICC economists say their research shows that the appreciation of RMB to yen is 20%, which corresponds roughly to 1.5% of the effective exchange rate of the RMB, which may cause China's actual exports to drop by about 2.5 percentage points, and has little impact on China in trade. In terms of investment, Japan's direct investment in China accounts for only about 7% of China's FDI, and it is difficult to invest in Japanese funds in the short term, and the impact is limited. < /p >
< p > if we make decisions based on this logic, China's monetary policy should not react too much to the depreciation of the Japanese yen, and the RMB exchange rate should remain stable. In fact, analysts say that China's monetary policy will not change with the short-term fluctuations of the yen. During the Asian financial crisis, the currencies of Japan, Korea and Southeast Asian countries depreciated competitively, and the value of the RMB had withstood pressure and remained stable. It is believed that the stability of the currency is conducive to the realization of various policy objectives, such as economic restructuring and RMB going out. < /p >
< p > but in our view, there is a big problem in the foregoing analysis. The direct impact of the devaluation of the yen on China's economy and the RMB may not be significant, but the depreciation of the yen will trigger the competitive depreciation of all currencies. In addition, the United States and the euro area continue to offer an unlimited easing policy. There is reason to believe that the global currency depreciation and liquidity will be a big probability event this year. In the eyes of ampong researchers, I am afraid we can not talk too much about the adjustment of the RMB exchange rate policy. The RMB exchange rate has been controlled in the past. It is a typical political decision to carry on without depreciation in the Asian financial crisis. Now the RMB exchange rate formation mechanism has changed greatly. The depreciation of the yen first hit the manufacturing industry in other countries. China is a big manufacturing country with a high proportion of exports. In the face of competitive devaluation of various countries, China is sure to be hit by the depreciation of the Japanese yen. < /p >
< p > in China's monetary policy this year, it is entirely appropriate to keep the policy flexibility of RMB depreciation. China should also make appropriate use of "export technology" to influence market expectations and show to the market that devaluation of the renminbi is also a policy option of the Central Bank of China. < /p >