The exchange rate of RMB against the US dollar fell back to the era of 6.4 yuan, what will happen in the future?

　　Zhongxin Finance, April 23 (Reporter Li Jinlei) Recently, the trend of RMB exchange rate has attracted attention.

The exchange rate of RMB against the US dollar fell back to the era of 6.4 yuan

　　The People's Bank of China authorized the China Foreign Exchange Trade System to announce that the central parity rate of RMB in the inter-bank foreign exchange market on April 22, 2022 is: 1 US dollar to RMB 6.4596.

This is 498 basis points lower than the previous trading day.

　　In early March, the central parity rate of the RMB against the US dollar was close to the era of 6.2 yuan.

Compared with 6.3014 on March 1, the central parity rate of the RMB against the US dollar has been lowered by 1,582 basis points over the past month.

　　In addition, the onshore RMB and offshore RMB exchange rates against the US dollar both fell back to the era of 6.4 yuan.

Among them, on April 22, the offshore RMB against the US dollar once fell below 6.50, hitting a new low since August 23, 2021.

　　Meanwhile, the U.S. dollar has strengthened, and the U.S. dollar index, which measures the greenback against six major currencies, has been rising since April and has now reached the 100 mark.

Why did the RMB exchange rate against the US dollar fall?

　　Generally speaking, the strength of the US dollar index has an inverse relationship with non-US dollar currencies such as the RMB.

　　Recently, with the further strengthening of the Fed's interest rate hike expectations, the US dollar index continued to climb after entering April.

Driven by the strength of the US dollar index, major Asian currencies including the Japanese yen, the Korean won, and the Singapore dollar fell against the US dollar, and the offshore RMB exchange rate was affected.

　　Among them, the depreciation of the yen has even rushed into the hot search. The exchange rate of the yen against the US dollar once fell to about 129, a new low in about 20 years.

From the beginning of March to the present, the yen has depreciated by more than 10% against the dollar.

　　The strengthening of the US dollar will naturally affect the correction of the exchange rates of other non-US currencies.

　　In addition, the 10-year Treasury bond yield spread between China and the United States has inverted for the first time since 2010.

Analysts believe that with the narrowing of the interest rate gap between China and the United States, fluctuations in the international financial market will put pressure on the RMB to depreciate.

　　Tan Yaling, president of the China Foreign Exchange Investment Research Institute, told Zhongxin Finance that since the 10-year treasury bond yields of the U.S. dollar and the renminbi have been inverted, the tendency of the renminbi to depreciate has gradually strengthened.

The future layout changes, capital transfer benefits and future expectations of interest rates or short-term depreciation caused by the differences in the dollar-related differences.

Since 2022, the two-way fluctuation of the RMB exchange rate will increase

　　Wang Chunying, deputy director of the State Administration of Foreign Exchange and spokesperson, said at a press conference on April 22 that since the beginning of this year, as of yesterday, the US dollar index has risen by 4.2%, and the

, and the closing price at 4:30 yesterday was 6.45.

In terms of multilateral exchange rates, the China Foreign Exchange Trade System's RMB exchange rate index rose by 2.4%.

Therefore, the stability of the RMB is relatively good.

　　At the same time, the RMB exchange rate has maintained two-way fluctuations, with an overall appreciation in January and February, and a depreciation since March.

Judging from the fluctuation direction of the next day, in the

; the fluctuation range between the highest price and the lowest price of the RMB exchange rate against the US dollar was 1.1%, which fully reflected the domestic foreign exchange supply and demand. Changes in the international market.

　　Guan Tao, the global chief economist of Bank of China Securities, pointed out in a video interview with Zhongxin Finance on the 20th that the "New" Observation of China's Economy has adjusted the exchange rate of the RMB in the past two days, but it must be taken into account that the US dollar index has exceeded 100.

The exchange rate of the RMB against the US dollar is now around 6 yuan. In 2020, when the US dollar index exceeds 100, the RMB will be more than 7 yuan.

Therefore, the RMB is still going relatively strong, and it is not the main constraint at present.

RMB and US dollar infographic.

Photo by China News Service reporter Li Jinlei

What is the future trend of the RMB exchange rate?

　　The research report of CICC pointed out that from the perspective of the bilateral exchange rate between the US dollar and the RMB, the average price level since the "8.11 exchange rate reform" in 2015 has been before 6.65-6.70.

The current exchange rate level of the RMB is still on the strong side, and there is a possibility of returning to the center for a long time in the future.

　　The research report also pointed out that in the long run, China's economic fundamentals support the valuation center of the RMB exchange rate to remain basically stable at a reasonable and balanced level for a long time.

This means that the RMB has neither a basis for long-term depreciation nor a basis for long-term appreciation.

In the context of increased short-term flexibility and intensified two-way volatility, the RMB exchange rate will still have the logic of mean reversion in the medium and long term.

　　Analysts at CITIC Securities pointed out that overall, supply chain disturbances caused by the impact of the epidemic and the strong trend of the U.S. dollar will put some pressure on the RMB in the short term, and the flexibility of the RMB will increase. There is still support, so there is no need to be overly concerned about the devaluation of the renminbi.

　　Tan Yaling predicts that the widening range of RMB fluctuations, clear trends and periodic roundabouts will be the main features of this year.

Compared with the long-term economic prospects, the stability of the political structure and the freedom of market opening, the long-term charm of the RMB has not changed.

　　Wen Bin, chief researcher of China Minsheng Bank, told Zhongxin Finance that the RMB exchange rate is generally expected to fluctuate in both directions at a reasonable and balanced level.

Therefore, for China's import and export and foreign trade enterprises, they should not bet on the rise and fall of the RMB, but to do a good job in the management of exchange rate risks to ensure the normal production and operation of enterprises.

(Finish)