The rebound exceeded 3,600 basis points in more than 3 months-

  Improved fundamentals support continued RMB strength

  Our reporter Yao Jin

  The exchange rate of the RMB against the US dollar hit a new high.

On September 17, the central parity of the RMB exchange rate in the inter-bank foreign exchange market was 1 U.S. dollar to RMB 6.7675, which was once again raised by 150 basis points from the previous trading day, breaking the 6.77 mark.

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.

  Recently, the RMB exchange rate has continued to strengthen.

Since September, as of the 16th, the offshore renminbi to US dollar exchange rate, which more reflects the expectations of international investors, has broken multiple barriers.

In August, the RMB exchange rate rose by 1.84%.

Since the May low, the RMB exchange rate has rebounded by more than 3,600 basis points in just over three months.

  Many analysts believe that the renminbi exchange rate has steadily strengthened due to the combined efforts of China’s economic recovery process exceeding expectations and the continuous increase in the attractiveness of renminbi assets.

  "First, supported by the continued improvement of China’s economic fundamentals; second, the U.S. dollar index continued to fall, and non-US currencies including the renminbi have all appreciated; third, international investors are optimistic about China’s economic prospects and renminbi assets, and foreign capital continues The flow into China's financial market has led to the appreciation of the renminbi." said Wen Bin, chief researcher of China Minsheng Bank.

  Cao Yuanyuan, technical director of the Research and Development Department of Oriental Jincheng, also believes that the market’s demand for RMB assets has increased due to the fact that China’s economy has shown better resilience, interest margins have widened, and risk appetite has rebounded after the global new crown pneumonia epidemic has eased. The RMB exchange rate strengthened.

  The chief analyst of fixed income at CITIC Securities clearly believes that in the context of the loose monetary policy of global central banks, the central bank of China has been relatively cautious in monetary policy during the epidemic, the interest rate gap between China and the United States has remained high, and the attractiveness of RMB assets has increased significantly, which has also promoted the RMB exchange rate. Stronger.

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

The latest data released by the National Bureau of Statistics showed that many key indicators such as consumption growth in August turned from negative to positive for the first time this year, indicating that the economy is gradually stabilizing and recovering.

  At the same time, China is continuing to promote the opening of the financial market. International investors are optimistic about China's economic prospects and RMB assets, and foreign capital continues to flow into China's financial market.

According to data recently released by the State Administration of Foreign Exchange, the net increase in foreign holdings of domestically listed stocks and bonds in July increased 1.4 times year-on-year.

  Regarding the next stage of the RMB exchange rate, Cao Yuanyuan believes that in the short term, although the US dollar index may still strengthen in stages, China's economy continues to recover and the improvement of RMB asset allocation value will further ensure the stable operation of the RMB.

In the near future, market expectations brought about by the strengthening of the RMB exchange rate have further enhanced the attractiveness of RMB assets, which will further support the trend of steady rise and two-way fluctuations in the RMB exchange rate in the short term.

  "In general, from 2019 to the first half of 2020, in the 361 trading days, the central parity of the RMB against the U.S. dollar experienced 173 trading days of appreciation and 187 trading days of devaluation. The RMB has remained basically stable while achieving two-way floating. "The Youth Research Group of the Monetary Policy Department of the People's Bank of China recently wrote an article that the RMB exchange rate formation mechanism has withstood many rounds of shocks and the exchange rate has become more flexible.

Since 2020, the annualized volatility of the RMB exchange rate against the US dollar has been 4.5%, which is basically the same as that of major international currencies. The exchange rate has further strengthened its role as an automatic stabilizer of macroeconomics and international payments.

  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.

  For enterprises, a stronger RMB exchange rate against the US dollar is good for importing enterprises.

Wen Bin analyzes that from the perspective of importing companies, the appreciation of the renminbi will not only strengthen against the US dollar, but also against a basket of currencies, which will reduce corporate procurement costs and improve profitability.

  "However, the appreciation of the renminbi has brought a greater adverse impact on export companies. Affected by the epidemic, external demand has slowed down, and the appreciation of the renminbi has been superimposed, and the cost of export products of enterprises has increased, affecting the competitiveness of export enterprises’ products in the international market, and there are also exchange rate risks. , May lead to exchange losses. Therefore, export companies should take measures to prevent and avoid exchange rate risks.” Wen Bin suggested that policy support for export-oriented companies should be increased, and fiscal, financial, and export tax rebates should be increased. .