China News Service Client, Beijing, July 10 (Reporter Li Jinlei) Recently, the renminbi has not only "newed" 5 yuan of new banknotes, but also behaved like the Chinese stock market: strong.
Look at the three sets of data:
First, the exchange rate of RMB against the US dollar returned to the 6th era.
The central parity rate of the RMB against the US dollar.
On July 9, both the onshore and offshore RMB exchange rate against the US dollar recovered the 7.0 mark and returned to the "6 era." On July 10, the central parity of the renminbi exchange rate was 1 US dollar to 6.9943 yuan, an increase of 142 basis points from the previous trading day. It rose four days in a row and also returned to the "6 era." The US dollar index is weak, currently around 96.
Second, the RMB's share of global foreign exchange reserve assets reached a record high.
The International Monetary Fund (IMF) recently released data. In the first quarter of this year, the proportion of RMB in global foreign exchange reserve assets rose to 2.02%, a record high, higher than the Australian dollar 1.55% and the Canadian dollar 1.78%.
Third, the scale of China's foreign exchange reserves has risen for three consecutive months.
The latest data from the State Administration of Foreign Exchange shows that as of the end of June 2020, China’s foreign exchange reserves were US$3.1123 trillion, an increase of US$10.6 billion from the end of May, an increase of 0.3%, and an increase of 3 consecutive months.
Why is the RMB getting more and more fragrant?
Strong performance requires confidence and support.
Information chart of RMB and USD. China News reporter Li Jinlei
Continue to improve the fundamentals of the economy and support the strengthening of the RMB exchange rate.
Wen Bin, chief researcher of China Minsheng Bank, told reporters at Chinanews.com that after the outbreak of the New Coronary Pneumonia, the Chinese government coordinated the prevention and control of the epidemic and economic development, and achieved significant results. The main economic indicators continued to improve. The profits of industrial enterprises have achieved positive growth, the decline in consumer investment has narrowed, and the sales of automobile real estate have picked up. It is expected that the growth rate of China's economy will turn from negative to positive in the second quarter.
"In this context, the latest report of the IMF predicts a global economic recession of 4.9% in 2020, and the Chinese economy is expected to grow by 1%, which is the only positive growth among the major economies. The improvement of economic fundamentals is supported by the rebound of the RMB exchange rate. "Wen Bin said.
The spread between China and the United States has widened, and RMB assets have become popular, which has pushed up the appreciation of the RMB exchange rate.
Wen Bin analyzed that the current valuation of China's stock market is still relatively low. The yields of the national debt of major global economies are negative, and the spread between China and the United States is widening. These all make foreign investors optimistic about RMB assets. The characteristics and attributes of risky assets are becoming more and more obvious.
Moreover, with the implementation of a series of reform measures such as the promulgation and implementation of China's new securities law and the pilot registration system of the Growth Enterprise Market, foreign investors are more likely to participate in the domestic capital market and are more optimistic about the development, potential and prospects of China's capital market. It can be seen that the recent northward capital inflows into the Chinese capital market have spurred an increase in demand for the renminbi and promoted the appreciation of the renminbi.
Statistics show that foreign investors continue to be optimistic about China's A-share market and start buying, buying, and buying models. On the 9th, the northward capital inflowed for the whole day was 7.951 billion yuan, which was the net purchase for the sixth consecutive day. Since July, the northward capital has net purchased A shares of more than 60 billion yuan.
The Central Bank’s “China’s Monetary Policy Implementation Report for the First Quarter of 2020” released on May 10 also judged that the central banks of major economies have loosened monetary policy significantly, coupled with China’s leading epidemic prevention and resumption of production and production, leading to higher returns on RMB assets and relative Security may attract cross-border capital inflows.
The US dollar index weakened, non-US currencies rebounded, and there was strong demand for RMB asset purchases.
The US dollar index is also one of the important factors affecting the trend of the RMB exchange rate. In March, the United States made a big move to "rate cut to zero + unlimited quantitative easing" and started the helicopter money-spreading mode. At that time, people's panic was exacerbated. Although the Fed released a lot of water, the US dollar index hit a new high and broke the 100 mark. There is a "dollar shortage" in the world.
Today, the "dollar shortage" no longer exists, and the US dollar has lost the advantage of spreads. It has suffered from the decline of Wall Street investment banks, so the US dollar index has weakened and is currently in the 96-97 range.
Wen Bin analyzed that the strength of the US dollar index has an inverse relationship with RMB and other non-US dollar currencies. After the panic, the US dollar index began to fall from the high level in the early stage of the epidemic, and non-US currencies rebounded.
Zhao Xijun, deputy dean of the School of Finance and Economics of Renmin University of China, told reporters from ChinaNews.com that the interest rate spread between the United States and China has further widened, making the domestic financial market more attractive to international funds, and the economy, expectations, and markets are improving. At that time, international funds will increasingly value the assets of the renminbi, the renminbi will become an asset that avoids risks, and the renminbi exchange rate will remain basically stable.
A package of currency data charts.
Will the RMB continue to appreciate?
Regarding the trend of the RMB exchange rate, Tan Yaling, dean and chief economist of the China Foreign Exchange Investment Research Institute, told reporters from China News that the appreciation of the RMB exchange rate is beneficial to China’s import companies and has a certain impact on export companies. The RMB exchange rate depreciated in May and June. This appreciation is also a callback. It is not expected to continue to appreciate significantly, and will detour at the "7" mark.
The chief economist of Founder Securities believes that the renminbi exchange rate will remain stable against the backdrop of weakened domestic epidemic outbreaks and stable international payments. A weaker US dollar index will have a positive impact on the RMB exchange rate.
Wen Bin believes that in the medium and long term, the RMB exchange rate will maintain a two-way fluctuation at a reasonable and balanced level.
Zhou Maohua, an analyst at the Everbright Bank's Financial Market Department, also said that in the short term, the onshore RMB exchange rate is still expected to maintain a strong pattern, but the RMB exchange rate does not have the basis for a substantial strengthening, and will maintain two-way fluctuations near the equilibrium level in the future. This is mainly due to the high uncertainty of the global economic outlook, which may have an impact on the domestic economy, while the global demand for dollar hedging has not disappeared.
The regular meeting of the Monetary Policy Committee of the People's Bank of China held on June 24 in the second quarter of 2020 (89th in total) also mentioned that "maintain the basic stability of the RMB exchange rate at a reasonable and balanced level." (Finish)