RMB Has Continued To Depreciate Or Has Stopped.

The P > RMB rose by 154 basis points for the 10 day of the dollar spot exchange rate.

This shows that the central parity of the RMB against the US dollar has been rising in recent days, prompting investors to adjust their psychological expectations for the trend of the RMB exchange rate.

Analysts believe that the early stage of the central bank's regulatory objectives have basically been achieved. We should correct the pessimism of the market in a timely manner and avoid the over negative impact of the continued depreciation of the RMB on the economy, which is beneficial to the current steady economic growth, the prevention and control of financial risks and the reduction of the cost of financing. At the same time, some positive changes in the fundamentals will help to alleviate the pressure of RMB devaluation.

Although the revaluation of the renminbi is not enough, the gradual devaluation has ended.

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< p > foreign trade surplus data explain the fluctuation of RMB exchange rate in a short time.

In May, the trade surplus was $35 billion 920 million, an increase of 74.9% over the same period last year, and the scale of the surplus expanded for 3 consecutive months.

The increase in foreign trade surplus, especially the monthly data far exceeding expectations, has played a supporting role in the RMB exchange rate trend.

However, the "a href=" //www.sjfzxm.com/news/index_c.asp "/a" has suddenly turned higher against the US dollar exchange rate, which is not consistent with the US dollar trend in the international market. It can not be completely explained by market factors alone.

The central parity of the RMB exchange rate has always been regarded as an important window to observe the guidelines of the central bank's "a" href= "//www.sjfzxm.com/news/index_c.asp" > exchange rate policy < /a >. In recent days, the central parity of the RMB against the US dollar has risen significantly, triggering speculation about the exchange rate policy is not difficult to understand.

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< p > after February, the continued < a href= "//www.sjfzxm.com/news/index_c.asp" > depreciation > /a >, both the trend and expectation of RMB exchange rate in the foreign exchange market, or the willingness of the private sector to hold foreign exchange and cross-border capital flows, have changed significantly.

It is expected that differentiation will enhance the fluctuation of RMB exchange rate, and enterprises and institutions will adjust the allocation of foreign currency assets and liabilities, increase arbitrage costs and reduce cross border arbitrage capital inflow.

It should be said that the central bank's regulatory objectives have basically been achieved, and the side effects of RMB depreciation are accumulating. We should rectify the pessimistic expectations of the market for the RMB exchange rate and avoid the excessive negative impact of the continued depreciation of the RMB on the economy.

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< p > on the one hand, if the RMB continues to depreciate significantly, it may impact domestic asset prices and financial market stability.

The depreciation of RMB may exacerbate short-term capital outflow and directly affect domestic asset prices.

In the long term unilateral appreciation of RMB, domestic enterprises have obvious liabilities foreign currency tendency, resulting in accumulation of various explicit and implicit foreign debts and accumulating a large number of exchange rate exposures.

Once the RMB enters a sustained depreciation channel, the cost pressure of foreign currency liabilities will increase sharply, which will aggravate the financial risk and operational pressure of enterprises and further impact domestic financial market.

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< p > on the other hand, if the RMB continues to depreciate significantly, it will violate the macro policy orientation of reducing the cost of financing.

As the early Yuan continued to depreciate and exchange rate volatility increased, the new foreign exchange holdings dropped significantly, which means that the supply of low-cost funds decreased. If there were no initiatives such as reducing reserve requirement ratio, the market capital cost may rise, which is inconsistent with the relevant departments' efforts to reduce the cost of social financing.

Keeping the RMB exchange rate relatively stable and reasonably guiding foreign exchange capital inflow is beneficial to the current steady economic growth and the reduction of financing costs.

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< p > the core of judging whether the RMB devaluation pressure is eliminated is the economic situation.

Recently, some positive changes in the economic fundamentals have helped to ease the pressure on RMB devaluation.

Combined with the economic data in May, the signs of China's short-term economic stabilization are more clear. With the improvement of export policy and the steady growth policy results, the market's expectation of economic growth has been improved, which may help to alleviate the pessimistic trend of RMB exchange rate trend.

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< p > in the short term, the central parity of the RMB against the US dollar is higher, which does not mean that the central bank will guide or condone the RMB's unilateral appreciation.

As the European Central Bank further implements loose monetary policy, our central bank, like redirecting the appreciation of the renminbi, is inconsistent with the direction of the previous policy and is not conducive to maintaining the positive results of the marketization reform of the RMB exchange rate formation mechanism.

At present, the downward pressure on domestic economic growth is still relatively large, and the gradual easing of monetary policy has not changed.

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