Chinanews.com client, Beijing, May 26 (Reporter Li Jinlei) Recently, the exchange rate of the RMB against the US dollar has risen sharply, causing concern.
RMB appreciation advances into the 6.3 yuan era
Since April this year, the RMB exchange rate against the US dollar has continued to appreciate.
On May 26, the onshore RMB and offshore RMB exchange rates against the U.S. dollar fluctuated and rose. As of press time, the onshore RMB exchange rate against the U.S. dollar and the offshore RMB exchange rate against the U.S. dollar both rose above the 6.4 yuan mark and entered the 6.3 yuan era.
In addition, on May 26, the central parity of the RMB exchange rate in the inter-bank foreign exchange market was 1 U.S. dollar to RMB 6.4099, an increase of 184 basis points from the previous trading day, setting a new high in nearly three years, one step away from the era of 6.3 yuan.
On May 26, the central parity of the RMB against the US dollar in the inter-bank foreign exchange market.
Increased by more than 7,100 basis points in a year
In May of last year, the RMB exchange rate against the U.S. dollar was still at the era of 7.1 yuan. Now that one year has passed, the RMB exchange rate against the U.S. dollar has moved towards the era of 6.3 yuan.
Data show that the central parity of the RMB against the US dollar was 7.1293 on May 26, 2020, and it was 6.4099 on May 26 this year.
In other words, within one year, the central parity of the RMB against the US dollar has increased by 7,194 basis points.
The bank staff is counting the currency.
Zhang Yunshe
what does that mean?
Those who changed dollars last year obviously lost money.
From 7.1293 to 6.4099, if you exchange 10,000 U.S. dollars, you would need 71,293 yuan at that time, but today you only need 64,099 yuan, which can save 7,194 yuan.
7,194 yuan, which is a month's salary for many people. Obviously, if I changed dollars last year, I would be crying in the toilet now.
Of course, due to the appreciation of the renminbi, it will be more cost-effective for ordinary people to reduce the exchange cost of traveling abroad, studying abroad, and shopping.
RMB and USD data map.
Photo by Chinanews reporter Li Jinlei
Some people are happy and some are worried about the appreciation of the renminbi.
I like import companies.
A stronger renminbi is good for importing companies.
Wen Bin, chief researcher of Minsheng Bank, believes that the appreciation of the RMB exchange rate will reduce the purchasing costs of importing companies and increase their profits.
Especially at the moment, the prices of some bulk commodities continue to rise sharply, the prices of some varieties hit new highs, and the cost of importing raw materials for enterprises has increased. Therefore, the appreciation of the renminbi will also alleviate the pressure brought by the surge in bulk commodity prices.
What is worrying about is export companies.
The appreciation of the renminbi is not conducive to exports.
Because the cost of export products increases, which affects the competitiveness of export enterprises' products in the international market, there will also be exchange rate risks, leading to exchange losses.
Tan Yaling, director of the China Institute of Foreign Exchange Investment, told reporters on Chinanews.com that the appreciation of the renminbi, combined with rising raw materials and rising shipping prices, will have a greater impact on exports and will further reduce the profits and living space of small and medium foreign trade companies.
A view of Ningbo Port.
Photo by Shen Yingjun
Why continue to appreciate?
Regarding the reason for the strengthening of the RMB exchange rate, Tan Yaling analyzed that the appreciation of the RMB is related to the weakening of the U.S. dollar index, and the market’s sentiment towards the appreciation of the RMB is more serious. At the same time, China’s economy continues to recover and foreign capital flows into China’s foreign exchange market and stock market. Foreign capital uses favorable opportunities to arbitrage. The phenomenon of hedging and hedging is more common, and it also stimulates the appreciation of the renminbi.
Data shows that on May 25th, A-shares rose sharply, turnover returned to one trillion yuan, and funds went northward to set a new record.
CICC Macro released a research report on the 26th, stating that since April, the RMB exchange rate against the US dollar has continued to appreciate. As of May 25, the cumulative appreciation rate has reached 2.5%. The CFETS RMB exchange rate index rose 0.5% from the beginning of April. In the same period, the US dollar index Downside is about 3.5%.
The weakening of the U.S. dollar index is an important driving factor for the recent appreciation of the RMB against the U.S. dollar.
CICC Macro said that in March against the backdrop of a strong U.S. dollar, foreign institutions slightly reduced their holdings of domestic bonds and returned to increase their holdings in April, which also supported the appreciation of the renminbi since April.
Map of a package of currency data.
Will it continue to appreciate?
Regarding the trend of the RMB exchange rate, CICC said that as the US dollar fluctuates weakly in the short and medium term, the RMB exchange rate against the US dollar will fluctuate in both directions.
In addition, looking forward to the second half of the year, with the inclusion of Chinese government bonds in the FTSE Russell Index starting in October, it will bring passive capital inflows.
However, as the global recovery deepens, foreign production capacity recovers and import prices rise, the current account surplus is expected to be lower than 2020, growth momentum may slow down, and structural problems of imperfect and uneven recovery may be fermented. , The economy may face adjustment pressure.
The room for further appreciation of the renminbi may be limited, and it is necessary to be alert to a certain degree of callback risk, but it is not too much to judge the downward pressure on the renminbi exchange rate.
Tan Yaling also believes that there is not much room for the RMB exchange rate to continue to appreciate sharply in the future. The current round of RMB appreciation has a long period of time, and it is also facing pressure to repair.
On May 23, Liu Guoqiang, deputy governor of the central bank, pointed out in a reporter's question on the RMB exchange rate that since the beginning of this year, the RMB exchange rate has risen and depreciated, floating in both directions, and has maintained basic stability at a reasonable and equilibrium level.
At present, my country's foreign exchange market is autonomously balanced, the RMB exchange rate is determined by the market, and the exchange rate is expected to be stable.
The future trend of the RMB exchange rate will continue to depend on market supply and demand and changes in the international financial market, and two-way fluctuations will become the norm.
RMB data map.
Photo by Ai Qinglong
Official vocalization
On May 21, the Financial Stability and Development Committee of the State Council convened its 51st meeting to clearly further promote the reform of interest rate and exchange rate marketization and maintain the basic stability of the RMB exchange rate at a reasonable and equilibrium level.
On May 23, Liu Guoqiang pointed out that the People's Bank of China has perfected a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies. This system is suitable for China's exchange rate system arrangements at present and in the future.
The People's Bank of China will focus on expected guidance, play the role of exchange rate adjustment macroeconomic and automatic balance of payments stabilizer, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
Tan Yaling pointed out that the recent remarks about "RMB will appreciate in the medium and long term" have contributed to the appreciation of the RMB to some extent. The announcement by the central bank over the weekend is also a correction of the recent trend of the RMB exchange rate.
Therefore, market expectations need to be stabilized.
What do you think about the appreciation of the renminbi?
(Finish)