Sino-Singapore Jingwei Client, October 28, according to the China Foreign Exchange Trading Center, on the 28th, the central parity of the RMB against the US dollar depreciated by 206 basis points to 6.7195.

As of the 28th, the central parity of the RMB against the US dollar has been depreciated for four consecutive trading days, a cumulative decrease of 639 basis points.

　　Source: China Foreign Exchange Trading Center

　　On the 27th, the onshore renminbi against the US dollar closed at 6.7045 at 23:30 Beijing time, up 73 basis points from the previous trading day; the offshore renminbi (CNH) against the US dollar closed at 6.7139 in late New York trading, down from the last trading day in New York. 138 basis points.

The U.S. dollar index fell. By the end of the New York trading session, the U.S. dollar index, which measures the U.S. dollar against six major currencies, fell 0.11% to 92.9426.

　　On the 27th, the Secretariat of the Foreign Exchange Market Self-discipline Mechanism issued an announcement on the adjustment of the quotation model for the central parity rate of RMB against the US dollar, stating that since this year, my country’s foreign exchange market has been operating smoothly, the international balance of payments has tended to balance, and the RMB exchange rate has been floating in both directions and increased flexibility based on market supply and demand. .

It is understood that some recent quotation banks for the central parity rate of RMB against the US dollar, based on their own judgments on economic fundamentals and market conditions, have taken the initiative to fade out the use of the "countercyclical factor" in the central parity price model of RMB against the US dollar.

The adjusted quotation model is conducive to improving the transparency, benchmarking and effectiveness of the mid-price quotations of quotation banks, and it is also a manifestation of the role of market entities in the self-regulation mechanism of the foreign exchange market.

　　It is reported that this is not the first adjustment of the countercyclical factor. Since 2017, the countercyclical factor was introduced into the quotation model of the central parity rate of the RMB to US dollar exchange rate. The use of the countercyclical factor has been adjusted many times with the expected rise and depreciation of the RMB exchange rate.

　　From the end of September to mid-October, the RMB appreciated rapidly against the U.S. dollar. The onshore RMB exchange rate against the U.S. dollar once approached the 6.40 mark, and the offshore RMB exchange rate against the U.S. dollar recovered the 6.63 mark.

Since late October, the exchange rate of RMB against the US dollar has continued to adjust.

As of press time, the offshore renminbi exchange rate against the U.S. dollar is reported at 6.7106 yuan.

　　Wind screenshot

　　According to a report from the Securities Times, Wang Youxin, a researcher at the Bank of China Research Institute, said that from a macro perspective, the use of counter-cyclical adjustment factors is mainly to stabilize the exchange rate and avoid procyclical behavior in which the exchange rate spirals downward during a crisis and companies competing for foreign exchange purchases. The herd effect, therefore, is more used in the devaluation phase to play a stabilizing and counter-cyclical role in regulation.

The use of counter-cyclical adjustment factors is gradually fading out this time in line with market situation changes and policy expectations.

Since May 28th, the appreciation of the RMB has been about 7%. Affected by this, the exchange rate of enterprises has increased, the exchange rate of sales has decreased, the situation of foreign exchange supply and demand and cross-border capital flows has improved, and the foreign exchange market risk has dropped significantly.

In this context, the gradual return of counter-cyclical adjustment factors to neutrality is in line with changes in the market situation and is conducive to the stability and orderly fluctuation of the RMB exchange rate.

　　It is worth noting that the central bank announced on October 10 that, starting from October 12, the foreign exchange risk reserve ratio for forward foreign exchange sales will be reduced from 20% to 0.

　　“Not long ago, the central bank has released a signal to stabilize the exchange rate by reducing the risk reserve ratio for forward foreign exchange sales to zero and continuing to promote financial openness. At this time, some quotation banks adjusted the mid-price quotation mechanism to comply with market conditions and regulatory intentions. Performance." Wang Youxin said.

　　According to media reports, industry insiders believe that, driven by the weak dollar, the yuan is expected to appreciate moderately, but the upside is limited.

　　Zhang Wei, chief researcher of Kunlun Health Asset Management, said that the US dollar lacks the driving factors for a sustained rebound, which means that the RMB may continue to be strong relative to the US dollar, but the upside is limited.

For some time to come, the “steep flip” of the RMB against the US dollar will be more difficult to appear.

(Zhongxin Jingwei APP)