Sino-Singapore Jingwei Client, July 24, according to data from China Foreign Exchange Trading Center, on the 24th, the central parity of the RMB against the US dollar was adjusted down by 17 points to 6.9938 yuan. This week (July 20-24), the central parity of the renminbi against the US dollar rose by 105 points.

  Screenshot of China Foreign Exchange Trading Center website

  This week, the exchange rate of RMB against the US dollar fluctuated widely around the 7.0 mark. On July 22, the onshore renminbi rose more than 300 basis points against the U.S. dollar in the morning, breaking the 6.97 mark, reaching a maximum of 6.9650, the first time in three months. The offshore renminbi also rose by nearly 100 basis points, reaching a maximum of 6.9649.

  However, affected by unexpected news, the US dollar index staged a "V-shaped" rebound near the close on the 22nd, and the RMB exchange rates of the two places fell rapidly. At 14:00 on the 22nd, the offshore renminbi plunged 300 basis points against the US dollar and fell below the 7 mark; onshore RMB plunged nearly 250 basis points against the US dollar and also fell below the 7 mark.

  In addition, on July 23, local time, the U.S. dollar index, which measures the U.S. dollar against six major currencies, fell 0.31% and closed at 94.6906 at the end of the foreign exchange market, dropping to the lowest level in the past two years. Some analysts say that the European Union countries reached an agreement on a 750 billion euro recovery fund, which boosted market confidence in the euro zone’s economic recovery, pushed the euro to the highest level since January 2019, and caused the dollar index to fall continuously. A non-US currency strengthened accordingly.

  The trend of the dollar index is related to changes in the exchange rates of many non-US currencies. Looking at the overall performance of the foreign exchange market recently, the U.S. dollar index has been on the decline, the main non-US currencies are in an appreciation channel, and the renminbi, Australian dollar, New Zealand dollar, euro, and pound sterling have all increased to varying degrees against the dollar.

  Wang Youxin, a researcher at the Bank of China Research Institute, said that affected by factors such as repeated US epidemics, delayed economic restart, slow economic recovery, and extremely loose monetary policy, the US dollar index has continued to fluctuate and decline, and the external constraints on the RMB exchange rate have weakened.

  CITIC Securities clearly believes that in the second half of the year, the importance of the US general election trend on the US dollar index is gradually increasing. No matter who is ultimately elected, the fundamentals and capital markets of the United States will not be allowed to fluctuate significantly. Therefore, downward pressure on the US dollar and US stocks may be more limited.

  Regarding the trend of the RMB exchange rate, Wang Youxin predicts that the RMB exchange rate will continue to fluctuate and rise in the second half of the year. However, considering that the current international situation is complex and changeable, at the special time of financial market fluctuations, the RMB exchange rate may also be subject to periodic adjustment pressures, and we should remain vigilant.

  Lian Ping, chief economist and dean of the research institute of Zhixin Investment, believes that my country's current economy is basically facing good, while the US economy and employment decline is relatively serious, forming a weak dollar. It is expected that the US dollar index will likely be in a downward trend in the second half of the year, and the renminbi will appreciate slightly, fluctuating around the center of 6.8-7.2. (Zhongxin Jingwei APP)