Chinanews client, Beijing, September 17th (Reporter Li Jinlei) "Momentum is like a rainbow"!

Many people use this term to describe the recent surge in the RMB exchange rate.

　　From the curve of the appreciation of the RMB exchange rate since the end of May, you can feel how fierce the RMB has appreciated.

Screenshot of the central parity of the RMB against the US dollar.

　　On September 16, the central parity of the RMB exchange rate in the inter-bank foreign exchange market was 1 U.S. dollar to RMB 6.7825, a sharp increase of 397 basis points from the previous trading day, breaking the 6.8 mark.

　　From a long-term perspective, on May 29, the central parity of the RMB against the US dollar was 7.1316. In just over three months, the central parity of the RMB against the US dollar appreciated by 3,491 basis points.

　　The offshore and onshore renminbi exchange rates against the U.S. dollar are "rising."

On the morning of September 16, the onshore and offshore RMB exchange rates both rose above the 6.77 mark.

Why does the RMB appreciate sharply?

　　Regarding the reason for the strengthening of the RMB exchange rate, Wen Bin, the chief researcher of China Minsheng Bank, told a reporter from Chinanews.com that first, China's economic fundamentals continued to be supported; second, the dollar index continued to fall, and non-US currencies including the RMB appeared. The trend of appreciation; third, international investors are optimistic about China’s economic prospects and RMB assets, and foreign capital continues to flow into China’s capital market, driving the appreciation of the RMB.

RMB and USD data map.

Photo by Chinanews reporter Li Jinlei

　　The improvement of China's economic fundamentals can be felt from the latest economic data.

The August economic data released by the National Bureau of Statistics on September 15 showed that a number of key indicators such as consumption turned from negative to positive for the first time this year.

　　Specifically, the total retail sales of consumer goods in August increased by 0.5% year-on-year, which was the first positive growth this year; the value added of the national industrial enterprises above designated size increased by 0.4% year-on-year from January to August, and the growth rate turned from negative to positive; exports grew from January to August 0.8%, the cumulative growth rate achieved positive growth for the first time during the year; commercial housing sales increased by 1.6% from January to August, which also achieved positive growth for the first time.

　　The chief analyst of CITIC Securities’ fixed income stated clearly that, in the context of the easing of global central banks, the Central Bank of China remained cautious and maintained its monetary policy during the epidemic, the Sino-US interest rate gap remained high, and the attractiveness of RMB assets has increased significantly. Promoted the strengthening of the RMB exchange rate.

What is the impact of the sharp appreciation of the RMB?

　　For ordinary people, the appreciation of the renminbi means that the money in their hands is more valuable, and it will be more cost-effective if you travel abroad, study abroad, and shop.

Because of the same money, more U.S. dollars can be exchanged, and more goods and services can be bought.

The bank staff is counting the currency.

Zhang Yunshe

　　Converting 100,000 US dollars can save more than 30,000 yuan

　　You can do a simple calculation: on May 29, the central parity of the RMB against the US dollar was 7.1316, and on September 16, it was 6.7825.

From 7.1316 to 6.7825, if you exchange 100,000 US dollars, you would need 713,160 yuan at that time, but today it only needs 678,200 yuan, which can save 34,910 yuan.

　　Wen Bin said that for residents, the appreciation of the renminbi is conducive to traveling abroad, shopping overseas, studying abroad, reducing overseas consumption costs, and increasing consumer welfare.

At the same time, international investors are optimistic about China's capital market, and the continued net inflow of international funds will also help domestic residents hold RMB assets and maintain stable returns on assets.

Good for imports, bad for exports

　　For enterprises, the strengthening of the RMB against the US dollar is good for importing enterprises and will bring certain pressure to exporting enterprises.

　　Wen Bin analyzed that from the perspective of importing companies, the appreciation of the renminbi, especially not only against the dollar, but also against a basket of currencies, will reduce procurement costs and increase profits.

　　However, it has a relatively large adverse impact on exporting companies. Affected by the epidemic, external demand has slowed down, and the appreciation of the renminbi will increase the cost of export products, which will affect the competitiveness of export companies’ products in the international market. There will also be exchange rate risks. May cause exchange losses.

Therefore, export companies must take measures to prevent and avoid exchange rate risks.

　　At present, many companies have taken measures to reduce exchange losses.

The listed company Hongbai New Materials recently announced that the company’s operating income accounts for a relatively large share of foreign sales and plans to carry out forward foreign exchange settlement and sales of no more than 50 million US dollars to reduce the impact of future fluctuations in the exchange rate of the US dollar and the euro against the RMB on the company’s operating performance .

Data map.

　　Obviously, the strengthening of the RMB exchange rate may continue. However, considering the subsequent risks, including global risk aversion, Sino-US relations, and asymmetric capital controls, the RMB exchange rate may show a slower slope of appreciation. The RMB exchange rate range may be 6.7-6.8.

The continued appreciation of the exchange rate may have a certain impact on China’s exports and manufacturing.

　　"We must increase policy support for export-oriented enterprises, and increase fiscal, financial, and export tax rebate support." Wen Bin suggested.

　　Wen Bin pointed out that the RMB exchange rate is a reflection of the fundamentals of China's economy. In the short term, because China's economy continues to rebound, international investors are optimistic about the capital market, and foreign capital continues to flow in. These factors are expected to further promote RMB appreciation.

And exchange rate stability contributes to economic and financial stability, and the two complement each other.

We must steadily and orderly expand the opening of the financial market, improve the RMB exchange rate formation mechanism, and promote the internationalization of the RMB. In the long run, the RMB exchange rate will remain at a balanced and reasonable level.

　　What do you think about RMB appreciation?

(Finish)