Short Term Depreciation Of The Renminbi Accelerates The Long-Term Upward Trend.

< p > by the US Federal Reserve's continued reduction in the size of the purchase of debt, it pushed the US dollar up. In March 21st, the central parity of the RMB against the US dollar continued to decline, at 6.1475, a new low in the year.

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< p > March 17th, the exchange rate of RMB against the US dollar has gained the third expansion since the reform of the RMB exchange rate system in July 2005. The floating rate of RMB against the US dollar in the inter-bank spot foreign exchange market has expanded from 1% to 2%.

After several consecutive trading days, the renminbi continued to depreciate against the US dollar.

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If P moves to the whole body, where will the RMB go after the fluctuation of exchange rate, will the long-term trend be changed? Will the exchange rate market continue to accelerate? It becomes a problem that the market needs to answer.

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< p > strong > enlargement, there is still controllability < /strong > < /p >.

< p > since March 17th, the central parity of RMB against the US dollar has maintained a slight depreciation, while the spot exchange rate of RMB has accelerated.

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< p > RMB to us dollar < a href= "//www.sjfzxm.com/news/index_c.asp" > spot exchange rate < /a > after breaking through the 6.20 integer pass, the market bearish atmosphere is more and more thick.

In March 20th, the spot rate of RMB against the US dollar dropped to 386 points, to 6.2340, a year low.

As of the close of the day, the spot exchange rate of RMB was 6.2275, down 321 points, down 4 consecutive days, or nearly 1000 points.

At the lowest point of 6.2340, the floating rate of RMB against the US dollar is 6.1460 over the middle price of the day, exceeding 1%, reaching 1.43%.

Market participants say there is no sign of a reversal in the short-term.

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Jiang Shu, a senior analyst at Xingye Bank, said in an interview with reporters: "the expanded exchange rate performance is more reasonable." P

First of all, from the point of view, the intermediate price and spot exchange rate are all depreciating trend, but the depreciation rate of the intermediate price is relatively small, and the spot exchange rate market is magnified on this basis.

Second, the floating rate of RMB against the US dollar in the spot foreign exchange market exceeded 1%, which is far from the 2% limit, which is a reasonable floating, and this is the desired effect in the expansion itself.

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< p > from the fluctuation range, the fluctuation rate of RMB has increased from 0.5% to 1% in April 14, 2012, and the fluctuation of exchange rate has really reached 1%.

"At present, even the floating range of 1% has not been fully utilized, so the substantial impact of the expansion of the floating range on the fluctuation of the RMB exchange rate is not significant."

Louis Kuijs, chief economist of the Royal Bank of Scotland, China, pointed out to the international finance newspaper.

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After P expansion, the RMB exchange rate remains controllable.

The central bank believes that the current expansion of the volatility is appropriate and the risk is relatively small.

There are both factors that make RMB more and shorter, and full flexibility of two-way volatility will become the norm.

At the same time, if the exchange rate fluctuates exceptions, the people's Bank of China will also implement the necessary regulation and management to maintain the normal fluctuation of the RMB exchange rate.

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< p > expansion only depends on intraday exchange rate changes, even if the daily shocks reach 2%, the central bank will set a new RMB exchange rate intermediate price the next day.

Goldman Sachs Asia reported to the international finance daily that the expanded floating range is only a change within a day, and the extent of change between the sky and the sky is still set by the central bank.

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< p > < strong > a < href= > //www.sjfzxm.com/news/index_c.asp > > depreciation > /a > or paving < /strong > /p >

< p > a lot of insiders pointed out that the expansion is already expected, and the most obvious sign is the sharp depreciation.

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< p > in fact, from the beginning of the depreciation of RMB in early 2014, a number of economists, such as Shen Jianguang, Louis Kuijs, director general of Mizuho Securities, interviewed by the international finance daily, held that the RMB exchange rate continued to decline, which is the preparation of the Central Bank of China for expanding the fluctuation range of the RMB exchange rate.

Therefore, when the important step of the marketization of the RMB exchange rate was announced, the agencies responded calmly.

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< p > in fact, before 2007 and 2012, the RMB spot price showed a more obvious two-way fluctuation compared with the middle price. In the first 86 trading days of May 18, 2007, the spot closing price had a 23 day relative to the depreciation of the intermediate price, accounting for 27% of the total number of days. In the first 65 trading days of April 16, 2012, the spot closing price was 34 days relative to the intermediate price, accounting for about 52%.

However, since mid September 2012, the spot price has shown an unvarying unilateral appreciation trend relative to the middle price. From September 11, 2012 to February 24, 2014, there was no 346 day in which the spot price depreciated relative to the middle price.

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< p > the Bank of China report shows that if the central bank wants to expand the fluctuation range of RMB exchange rate for the third time, one of the necessary conditions is to change the market's unilateral expectation of RMB appreciation and resume the two-way fluctuation of the spot price of RMB around the middle price.

Otherwise, the expansion of volatility under the expectation of unilateral appreciation is likely to be interpreted as a signal that the government hopes to accelerate the appreciation of the renminbi.

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< p > the Bank of China report also points out that one of the major characteristics of the rapid devaluation of the current RMB is that the intermediate price should actively guide the devaluation.

Under the background of a slight decline in the overnight dollar index, the central parity price continued to depreciate and led the spot price to go out of the same market.

In addition, the current round of devaluation is relatively large.

Looking back at the trend of RMB in recent years, the RMB exchange rate will have a wave of adjustment at the beginning of the year.

However, since February this year, the central parity of the RMB has depreciated by 0.23%, the largest decline since December 2011, and the spot price depreciated by 1.06%.

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The purpose of the P depreciation is obvious. Wang Kun, a macroeconomic analyst at Founder Securities, pointed out that the rapid depreciation of the RMB against the US dollar since late 2 has led to a certain two-way fluctuation of the RMB exchange rate, which provided favorable conditions for the central bank to expand the range of spot exchange rate fluctuations.

In addition, this year's two national government work report also mentioned that we should expand the two-way floating rate of RMB exchange rate and further push forward the exchange rate reform.

Therefore, increasing the spot exchange rate fluctuation interval is expected in the market.

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< p > "the Central Bank of China is promoting enterprises and financial institutions to prepare for a more flexible RMB exchange rate."

Louis Kuijs analysis said, "the central bank hopes to strengthen market volatility and make people adapt."

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< p > < strong > short term or continue to depreciate < /strong > < /p >

< p > increasing the fluctuation of RMB exchange rate will aggravate the depreciation of the RMB? < /p >

< p > Wang Kun believes that in the current two-way fluctuation of the RMB exchange rate, the expectation of depreciation will still dominate.

The expansion of the spot exchange rate may strengthen the devaluation of the RMB to a certain extent.

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Less than P, however, "the continued depreciation of the renminbi is not what the central bank wants to see."

Jiang Shu thinks.

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< p > the chief economist of the Industrial Bank, Lu political commissar [micro-blog], said that the central bank announced the RMB exchange rate volatility expanded again, indicating that the process of depreciation led by the intermediate price has come to an end.

In the next one to two quarters, the RMB exchange rate will show a state of oscillation.

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< p > the expansion of spot exchange rate is not a decisive factor in the trend of exchange rate, and the strengthening of the expected depreciation of the RMB spot exchange rate will also accelerate the correction of the central bank's devaluation expectations. Therefore, Founder Securities does not change the judgement of the short-term phenomenon of RMB depreciation.

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Before P, the people's Bank of China has stressed that the change of RMB < a href= "//www.sjfzxm.com/news/index_c.asp" > /a > mainly depends on the supply and demand of foreign exchange based on balance of payments.

At present, China's fiscal and financial risks are controllable, foreign exchange reserves are abundant, and the ability to resist external shocks is strong. There is no foundation for a significant depreciation of the RMB exchange rate. "

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< p > however, from the historical data, the central bank tends to "a" href= "//www.sjfzxm.com/news/index_c.asp" > floating interval < /a > enlargement and weaken the RMB.

In the spring of 2012, the yuan depreciated 0.5% in a few weeks. Then in April 16, 2012, the central bank announced that the range of RMB Fluctuation would be expanded from 0.5% to 1%.

In the 3 months after that, the yuan continued to depreciate by 1.4%, until July.

The central bank's expansion of exchange rate volatility is considered a typical "central bank style" by foreign financial institutions, so the market also expects that the central bank will continue to dominate the depreciation of the renminbi.

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"P" Goldman Sachs believes that "taking history as a mirror, the yuan will probably continue to depreciate in the coming months, because the central bank hopes to reduce speculative capital inflows by increasing two-way volatility of exchange rates.

But considering the expansion of the trading range, the RMB has depreciated by 1.8%, much higher than the depreciation rate of the first 0.5% of the trading range in April 2012, so the future depreciation rate may be smaller than that in 2012. "

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< p > however, in the general bearish expectations, Louis Kuijs still cautioned cautiously that it was necessary to look at the mentality of the central bank policy-makers.

"In the next few days, the appreciation of the renminbi may be possible.

But anyway, the principle we should pay attention to is that the fluctuation of RMB exchange rate is still controlled by the central bank rather than the market led behavior.

He told reporters that although the renminbi appreciation is possible in the next few days, it will still be decided by the regulators, making it difficult to make an accurate judgement from the market level.

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