China-Singapore Jingwei Client, May 10, according to data from China Foreign Exchange Trading Center, on the 10th, the central parity of RMB against the US dollar was reported at 6.4425, an increase of 253 points. The central parity of the previous trading day was reported at 6.4678, and the RMB closed at 6.4589 on the previous trading day. .

   Screenshot of Forex Trading Center

  U.S. dollar weakens in April, China's foreign reserves stop falling and rebound

  In the past two months or so, the exchange rate of the renminbi against the U.S. dollar has drawn a "heartbeat curve."

The dollar index serves as a key influencing factor.

The U.S. dollar index has "taken off" since late February, rising from the 90th line to above 93, but it has "fallen" since April, and is currently below the 91 mark.

  According to data from the State Administration of Foreign Exchange, as of the end of April 2021, my country's foreign exchange reserves amounted to US$31982 billion, an increase of US$28.2 billion or 0.89% from the end of March.

Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, explained that in the international financial market, affected by factors such as the new crown pneumonia epidemic and vaccine progress, major countries’ monetary policy expectations, and macroeconomic data, non-US dollar currencies have risen relative to the US dollar. Asset prices have generally risen.

Foreign exchange reserves are denominated in U.S. dollars, exchange rate conversion and asset price changes and other factors have combined effects, and the scale of foreign exchange reserves increased during the month.

  Wang Chunying said that the current new crown pneumonia epidemic is still spreading abroad, the global economic recovery is still unstable and uneven, and the international financial market is still facing many uncertainties.

However, since the beginning of this year, my country’s economic operation has started well, high-quality development has achieved new results, and the flexibility of the RMB exchange rate has continued to increase, which is conducive to maintaining the basic stability of foreign exchange reserves.

  Wen Bin, chief researcher of China Minsheng Bank, told the Sino-Singapore Jingwei client that my country’s economic recovery has achieved remarkable results, and the economic boom continues to be in the expansion range. The recent consumption recovery has shown an accelerating trend. The strong export has driven the improvement of manufacturing investment and the flexibility of the RMB exchange rate has continued to increase. RMB assets are more attractive, and these positive factors provide support for the stability of foreign exchange reserves.

What is the future exchange rate trend?

  Regarding the future trend of the RMB exchange rate, the Peking University National Economic Research Center recently released a report predicting that the RMB exchange rate in May will tend to fluctuate and appreciate, with two-way wide fluctuations in the range of 6.45 yuan to 6.60 yuan.

  According to its report, the RMB exchange rate in April showed a volatile upward trend. The support of economic fundamentals, the fluctuation of the U.S. dollar index and the continued tension in Sino-foreign relations were the main factors affecting the trend of the RMB exchange rate this month.

It is expected that as China’s economy recovers steadily in May 2021, economic fundamentals will continue to provide certain support for the RMB trend. However, as the external environment will continue to be tense, the U.S. dollar index is expected to remain volatile, superimposed on the severe situation of India’s new crown epidemic prevention and control. It is highly probable that the renminbi exchange rate will be under pressure.

  According to the Zheshang Securities Research Report, the exchange rate fluctuation range of the RMB against the US dollar is expected to range from 6.5 to 6.9 in the second half of the year, suggesting relatively greater pressure for depreciation.

However, the increase in exchange rate volatility is conducive to domestic policy space, and the two-way floating of the RMB exchange rate has become the norm, which can better play its role as an automatic stabilizer of macroeconomic and international payments.

At the same time, we will not change our judgment on the appreciation of the RMB exchange rate in the medium and long term. The US dollar will decline in the next 8-10 years, and the RMB exchange rate will go out of a certain appreciation trend.

(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.)