China-Singapore Jingwei Client, February 9th, according to data from China Foreign Exchange Trading Center, the central parity rate of RMB on the 9th was reported at 6.4533, an increase of 145 points, the central parity rate of the previous trading day was reported at 6.4678, and the previous trading day onshore RMB closed at 6.4583.

Screenshot of China Foreign Exchange Trading Center website

  The Central Bank released the "China Monetary Policy Implementation Report for the Fourth Quarter of 2020" on the 8th and mentioned that in 2020, the RMB exchange rate will float in both directions based on market supply and demand, with increased flexibility, and remain basically stable at a reasonable and balanced level.

At the end of 2020, the China Foreign Exchange Trading Center (CFETS) RMB exchange rate index reported 94.84, an appreciation of 3.78% from the end of the previous year.

  Looking back on 2020, the highest central parity rate of the RMB against the US dollar was 6.5236 yuan, and the lowest was 7.1316 yuan. Among 243 trading days, 140 trading days appreciated and 103 trading days depreciated.

The largest single-day appreciation is 1.00% (670 points), and the largest single-day depreciation is 0.76% (530 points).

The exchange rate of the renminbi against major international currencies has depreciated and increased, floating in both directions.

At the end of 2020, the central parity of the RMB against the U.S. dollar, euro, pound sterling, and yen will appreciate 6.92%, depreciate 2.61%, appreciate 2.92%, and appreciate 1.34% respectively from the end of 2019.

  The central bank stated that it will improve the market-based interest rate formation and transmission mechanism, improve the central bank's policy interest rate system, deepen the reform of the loan market quoted interest rate, consolidate the results of the decline in the real interest rate of loans, and promote the stability and decline of the comprehensive financing cost of enterprises.

Give play to the decisive role of market supply and demand in the formation of exchange rates, enhance the flexibility of the RMB exchange rate, strengthen macro-prudential management, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

  In the next step, the central bank will steadily deepen the market-oriented reform of the RMB exchange rate, improve the managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies, maintain the flexibility of the RMB exchange rate, and make use of exchange rate adjustments for macroeconomic and international balance of payments automatic stability器 effect.

Stabilize market expectations, guide enterprises and financial institutions to establish a "risk-neutral" concept, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

  Tan Yaling, an independent economist at the China Institute of Foreign Exchange Investment, pointed out that since the end of the year, the phenomenon of RMB appreciation is worthy of vigilance and prevention.

She said that the appreciation of the renminbi seems to be conducive to the realization of this goal, but it is also necessary to pay attention to the problems behind the substantial appreciation.

For example, data shows that global trade will shrink sharply in 2020, with China’s import and export surplus of US$535 billion, an increase of 27% year-on-year, second only to 2015.

Foreign-related receipts and payments by the banks of the Foreign Exchange Administration showed that in the same period, the customs foreign-related trade receipts and payments had a surplus of US$171.7 billion, which was US$363.4 billion less than the customs import and export surplus.

For Chinese foreign trade companies with small profits but quick turnover, the foreign trade surplus cannot represent an increase in foreign trade profits when the renminbi appreciates sharply.

  In Tan Yaling's view, at present, the renminbi is becoming a favored asset. The main reason is the difference in interest rates between the renminbi and the US dollar.

At the same time, the exchange rate differential effect of the tendency of RMB appreciation is conducive to foreign holdings.

The economic downturn affected by the epidemic around the world will inevitably lead to extreme abnormalities in investment value and speculation.

In contrast, China or some emerging markets have become a temporary safe haven, and there is an atmosphere of speculation.

This is also the reason for the passive appreciation of the RMB.

(Zhongxin Jingwei APP)

(The opinions in the article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)