Sino-Singapore Jingwei Client, July 22. According to data from China Foreign Exchange Trading Center on the 22nd, the central parity of RMB against the US dollar was reported at 6.9718, an increase of 144 basis points.
Source: China Foreign Exchange Trading Center
As of press time, the onshore RMB has risen by more than 300 basis points against the US dollar, breaking the 6.97 mark, setting a new high since March. The offshore RMB against the US dollar also rose above the 6.97 mark.
Source of USD/RMB trend: Wind
Recently, the RMB exchange rate has strengthened. First, on July 9, the onshore renminbi closed at 6.9862, and the US dollar closed at 6.9976 against the offshore renminbi, both rising above "7", the first time since March 17. The next day, the central parity of the RMB against the US dollar in the inter-bank foreign exchange market reported 6.9943, the highest since March 13.
Regarding the recent renminbi trend, Soochow Securities analysts pointed out that the improvement of economic fundamentals is the main driving force supporting the renminbi’s “breaking 7 and returning to 6”.
Soochow Securities further stated that, first, compared with other countries and regions in the world, whether it is the overall prevention and control of the epidemic or the steady progress of resumption of production and work, China’s various economic indicators have demonstrated the excellent performance of “first in, first out”. Continue to provide momentum for RMB appreciation.
Second, from the perspective of the central bank's monetary policy, my country's central bank has adopted a relatively loose monetary policy to support the recovery of the real economy, while maintaining a reasonable ample liquidity, and providing certain policy support for the strengthening of the RMB against the US dollar.
Third, under the interaction of liquidity and risk appetite, the Chinese market, where the influence of the domestic epidemic has weakened and the balance of payments has stabilized, has become the "sweet and pastry" of international capital. In addition, my country's introduction of measures to facilitate the participation of foreign investors in the capital market has also strengthened investors' confidence in the development potential of China's capital market. Therefore, the characteristics of RMB as a safe-haven asset have become more apparent. The inflow of a large amount of overseas funds into my country's capital market has led to the recent strong demand for purchases in the renminbi and foreign exchange market, which has directly led to the steady appreciation of the renminbi.
At a press conference held by the State Council Information Office on July 17, Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, said that from observations, short-term exchange rate fluctuations are mainly driven by market forces. Wang Chunying mentioned that since the beginning of this year, the RMB exchange rate has remained basically stable within a reasonable and equilibrium level. However, the two-way volatility is more obvious and the flexibility has increased. When the exchange rate fell to the lowest position this year, it was close to 7.2 yuan, and now it has risen above 7 yuan, so the two-way volatility is still very obvious.
What impact does a stronger RMB exchange rate have on people's lives? In this regard, Wang Chunying pointed out that the exchange rate of 7 this year will not have much impact on people who do not hold too many foreign currency assets. The epidemic this year has also reduced opportunities for people to travel and study abroad. Therefore, no matter the exchange rate is 7.2, 7 or 6.99, it will not have a major impact on life.
Regarding the follow-up RMB exchange rate trend, the deputy director and chief fixed income researcher of the CITIC Securities Research Institute clearly stated that under the influence of fundamental factors and monetary policy factors, the RMB exchange rate has support in the direction of appreciation, but taking into account the Sino-US relationship Factors, there is still the possibility of fluctuations in its trend. The strengthening of the RMB exchange rate may not be achieved overnight, and it may experience some twists and turns.
Obviously, for the current situation in China, a too strong or too weak RMB exchange rate is not the optimal solution. Keeping the exchange rate relatively stable within a reasonable range is more beneficial to the capital market and the economy as a whole. Therefore, in the future, the RMB exchange rate may be centered at 7 and fluctuate within a controllable range. (Zhongxin Jingwei APP)