The exchange rate of the RMB against the US dollar has broken through the "three barriers", how long can the "New Year's Eve" rally last?

(Economic Observer) The exchange rate of the RMB against the U.S. dollar has broken the "three barriers" in a row. How long can the "New Year's Eve" rally last?

　　China News Agency, Beijing, January 10 (Reporter Xia Bin) The exchange rate of RMB against the US dollar has gone through a wave of "New Year's Eve" rise.

On the 10th, the China Foreign Exchange Trading Center reported that the central parity rate of the RMB against the U.S. dollar was 6.7611, breaking through the 6.8 mark, the highest level since August 15, 2022, a sharp increase of 654 basis points from the previous trading day.

　　Judging from the trend of the central parity rate of the RMB against the U.S. dollar, it broke through the integer mark of 7 on December 6 last year. In January this year, it continued to break through the two marks of 6.9 and 6.8. The U.S. dollar index fell after the recent rise. Still fluctuating at periodic lows, it reported 103.19 as of 15th on the 10th.

　　Where did such a "New Year's Eve" rally come from?

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in a recent interview with the media that since the end of last year, the RMB exchange rate has rebounded sharply, and foreign capital inflows have continued to grow, which fully reflects that the international financial market is firmly optimistic about China's economic development and full of confidence in economic fundamentals such as prices.

　　Wang Youxin, a senior researcher at the Bank of China Research Institute, believes that the recent continuous recovery of the RMB exchange rate is in line with the changing trend of China's economic fundamentals.

In the absence of particularly large changes in the U.S. dollar index, the RMB exchange rate continues to rise, reflecting that the domestic economic fundamentals gradually dominate the impact of the RMB exchange rate.

　　He also mentioned that in the context of the global economic recession, the sound recovery of China's economy has made RMB assets a hot spot for international capital. .

　　How long can such a "New Year's Eve" rally last?

Pang Ming, Chief Economist and Research Director of Jones Lang LaSalle Greater China, told reporters from China News Agency that the RMB exchange rate has risen steadily recently, cross-border capital inflows have continued to grow, and the scale of foreign exchange reserves has remained generally stable.

　　In his view, the above performance shows that the international financial market and global investors are full of confidence in the long-term sound fundamentals of China's economic development and the improvement of policy quality and efficiency, and that they are confident in optimizing and adjusting various measures for epidemic prevention and control and implementing them in an orderly manner. Full confidence in the balance of payments situation and the resilience of the foreign exchange market, full confidence in building a new higher-level open economic system and accelerating the orderly process of RMB internationalization, and that China can provide continuous, stable, safe, and long-term investment opportunities full of confidence.

　　Pang Ming bluntly said that driven by these positive factors and positive expectations, it is expected that the RMB exchange rate will continue to remain basically stable at a reasonable and balanced level. , Transparency will continue to improve, and the overall trend throughout the year is expected to maintain a steady rise, moderate strength, and gradually approach the medium and long-term equilibrium value level and reasonable range.

　　Wang Youxin predicts that the RMB exchange rate will continue to fluctuate and rise in 2023.

As the epidemic situation in various places gradually peaks and improves, activities in areas such as personnel mobility, transportation, catering, and consumption will gradually resume, and market confidence will further increase.

The economic growth pressure of economies such as Europe and the United States will accelerate, and discussions on monetary policy shifts may gradually heat up. The dollar will likely continue to fall, and the restrictive effect on the renminbi will weaken.

　　Wen Bin, chief economist of China Minsheng Bank, also pointed out that on the whole, the continued recovery of China's economic fundamentals and moderate inflation in 2023 will help maintain the stability of the RMB exchange rate.

Considering the fundamentals of the economy and the balance of payments, it is expected that in 2023, the RMB exchange rate will show two-way fluctuations, moderate recovery, and gradually approach a long-term reasonable range.

　　"In the medium and long term, the RMB exchange rate will maintain two-way fluctuations, but overall it will continue to strengthen." Guo Shuqing said.

(Finish)