"Countercyclical factors" fade out and fully release the vitality of the RMB exchange rate market
Financial observation
The use of "counter-cyclic factor" does not mean to give up forever, or to give up.
Recently, the secretariat of the foreign exchange market self-discipline mechanism announced that recently some banks that quote the central parity rate of RMB against the U.S. dollar, based on their own judgments on economic fundamentals and market conditions, have taken the initiative to adopt the "countercyclical factor" in the central parity price model of RMB against the US dollar. Fade out to use.
In this regard, society has various interpretations.
To objectively, comprehensively, and accurately grasp the practice of the central bank's external management department, we must first understand the "countercyclical factor."
In layman's terms, the deep meaning of the "countercyclical factor" is to first remove the impact of basket currency changes from the volatility of the previous day's closing price compared to the middle price, thereby obtaining exchange rate changes that mainly reflect market supply and demand, and then pass the countercyclical coefficient The adjustment to obtain the "countercyclical factor", that is, the exchange rate mid-price quotation model is adjusted from the original "closing price + basket of currency exchange rate changes" to "closing price + basket of currency exchange rate changes + countercyclical factor", and the "countercyclical factor" is established "The purpose is to stabilize the excessive fall or excessive rise of the RMB foreign exchange rate, which essentially acts as an anti-foreign exchange procyclical.
The foreign exchange management department of the central bank proposed the use of "countercyclical factors" at this time, which is determined by a profound financial background and in line with the actual exchange rate of the RMB.
At present, China’s fundamental economic situation is stable. Compared with the economic recession caused by the epidemic in Europe and the United States, especially the third wave of epidemic in the United States, the United States will extend the period of loose monetary policy and deficit fiscal policy. Will decline, and the RMB exchange rate will remain strong for quite some time in the future.
At the same time, we have also seen that the current corporate settlement exchange rate has increased, the sales exchange rate has fallen, the situation of foreign exchange supply and demand and cross-border capital flows has improved, and the foreign exchange market risk has dropped significantly.
The "counter-cyclical factor" has returned to neutrality, and its effect is actually not great, because in the past history of the rise and fall of the RMB exchange rate, the "counter-cyclical factor" is more to restrain the excessive fall of the RMB exchange rate.
While the RMB exchange rate is in a strong upward channel, the "countercyclical factor" is just a symbolic meaning.
Moreover, the use of the "counter-cyclical factor" quotation model to fade out is conducive to improving the transparency, benchmarking and effectiveness of the mid-price quotations of quoting banks, and makes the RMB exchange rate closer to the market exchange rate.
At the same time, if the renminbi exchange rate continues to maintain an upward trend, it will not be conducive to the stability of China's financial market, and it will also increase the expectations of Chinese companies' foreign exchange settlement and sales. This will make foreign funds inject into China's financial market more violently, raising China's asset prices and even industrial bubbles. , Will undoubtedly bring shocks to China's financial market.
And it will also make Chinese companies holding foreign exchange pity the foreign exchange settlement or continue to increase their foreign exchange purchases, which will not only push up the RMB exchange rate, but also bring greater foreign exchange investment risks to companies.
Based on this, the central bank’s foreign exchange management agency has faded out the use of "countercyclical factors." Another biggest goal is to use this approach to cultivate the formation of a self-regulatory mechanism for the foreign exchange market in a timely manner, so that market entities can play more roles in the exchange rate formation mechanism and form an effective The two-way volatility mechanism of foreign exchange keeps the magnitude and speed of RMB exchange rate appreciation at a reasonable level; it can moderately hedge against procyclical fluctuations in market sentiment, alleviate the possible "herding effect" in the foreign exchange market, and reserve enough for the stability of China's financial market space.
Therefore, as far as the current timing is concerned, it is the right move to fade out the use of "counter-cyclical factors", which is conducive to fully releasing the market potential of the RMB exchange rate mechanism, further activating the vitality of the RMB exchange rate, and conducive to the stability and orderly fluctuation of the RMB exchange rate. Nor will other countries attack the Chinese government's artificial intervention in the exchange rate.
However, fading out the use of the "countercyclical factor" does not mean that it will be discarded forever. With the economic recovery of major economies in Europe, America and the world, especially the rebound of the dollar exchange rate, the "countercyclical factor" may return to the RMB exchange rate formation mechanism. Come in the frame.
In short, the central bank's foreign exchange management agency is temporarily unable to remove the "countercyclical factor" from the RMB exchange rate intermediate quote mechanism.
□Mo Kaiwei (financial commentator)