China-Singapore Jingwei client, June 9th, China Foreign Exchange Trading Center data shows that on June 9, the central parity of the RMB against the US dollar rose by 171 basis points to 7.0711. The central parity of RMB against the US dollar was reported at 7.0882 on the previous trading day, and the onshore RMB closing price was reported at 7.0745.
Source: China Foreign Exchange Trading Center
The data released by the State Administration of Foreign Exchange recently shows that as of the end of May 2020, my country's foreign exchange reserves were 3101.7 billion US dollars, an increase of 10.2 billion US dollars from the end of April, or an increase of 0.3%.
Regarding the reasons for the changes in foreign reserves, Wang Chunying, spokesperson and chief economist of the State Administration of Foreign Exchange, pointed out that in May, my country's foreign exchange market operated stably, and foreign exchange supply and demand were basically balanced. In the international financial market, the dollar index fell slightly, and the asset prices of major countries rose. The combined effect of factors such as exchange rate conversion and changes in asset prices, the scale of foreign exchange reserves rose slightly during the month.
Wang Chunying emphasized that at present, the global epidemic situation and the world economic situation are still severe and complex, geopolitical risks are rising, and the turmoil in the international financial market is intensifying. As my country's overall efforts to promote epidemic prevention and control and economic and social development have achieved positive results, my country's economic operation is gradually recovering towards normalization. Looking ahead, the basic characteristics of my country's economic potential, resilience, large room for maneuver, and many policy tools have not changed, and it will continue to support the overall stability of foreign exchange reserves.
Guan Tao, global chief economist at BOC Securities, wrote that due to the worsening geopolitical situation, the exchange rate of the RMB against the US dollar has been weak over the past month. In May, the RMB exchange rate index of the China Foreign Exchange Trading Center fell by 1.5%, causing the cumulative increase of the RMB exchange rate index in the first five months to converge to 1.0%. Although the bilateral exchange rate of the renminbi has weakened, from the perspective of the multilateral exchange rate, it has remained stable and rising this year.
In Guan Tao's view, the depreciation of the exchange rate does not necessarily indicate that foreign exchange is in short supply. In the first 4 months of this year, despite the overall pressure on the RMB exchange rate, the domestic foreign exchange supply and demand in each month were basically balanced and the continuous supply was slightly larger than the demand. And $8.6 billion. It can be seen that the exchange rate is determined by the market, not necessarily by supply and demand. Factors other than supply and demand, such as market expectations, have increasingly important influence on market exchange rate trends.
Guan Tao believes that precisely because of the increased exchange rate fluctuations, the pressure of devaluation was released in time and the accumulation of depreciation expectations was avoided. In the first four months of this year, the exchange rate for bank valet collection and exchange was 66.1%, an increase of 4.7 percentage points from December last year; the exchange rate for payment of foreign exchange purchases was 62.4%, a decrease of 1.2 percentage points. The characteristics of mature currencies that the market is "low" (appreciation) and buying "high" (depreciation) are gradually appearing , and the role of the "stabilizer" of the exchange rate adjustment of the balance of payments is normally played. (Sino-Singapore Jingwei APP)