The RMB exchange rate is expected to remain basically stable in the second half of the year
The Fed's interest rate hike is imminent, and the RMB exchange rate remains relatively strong.
On July 25, the spot exchange rate of RMB against the US dollar closed at 6.7536 at 16:30, up 121 basis points from the previous trading day.
"Judging from the recent performance, although the US dollar has strengthened further, with the stabilization and recovery of the domestic economy, the stability of the RMB exchange rate among the world's major currencies has become more prominent. Since July, the multilateral exchange rate has been stable and rising." Deputy State Administration of Foreign Exchange Director and press spokesman Wang Chunying said on July 22 when introducing the data on foreign exchange receipts and payments in the first half of 2022.
"This week is mainly to wait for the results of the Fed's meeting on interest rates. If the rhythm of interest rate hikes of 75 basis points is maintained, it is expected that the US dollar will not fluctuate much. If it is not 75BP, it will bring great uncertainty to the trend of the US dollar index and the RMB. sex.” said a foreign exchange trader at a bank in Shanghai.
Since the beginning of this year, the US dollar index has appreciated by nearly 11%, and the exchange rate of the RMB against the US dollar has depreciated by about 6%.
Regarding the reasons for the relative strength of the RMB, CITIC Securities pointed out in the latest research report that from the perspective of trade, the trade balance of traditional exporting countries has turned from positive to negative, while my country's trade surplus has hit a new high, supporting the RMB to maintain its resilience. From the perspective of monetary policy, under the background of the divergence of monetary policies between China and the United States, the capital outflow caused by the inversion of the interest rate differential between China and the United States is more concentrated in the bond market, and the single-caliber capital outflow has a limited impact on the RMB.
Societe Generale Research pointed out that against the background of the continued outflow of foreign capital and the technical decline of the US dollar, the US dollar remained strong and fluctuated against the renminbi.
When looking forward to the trend of the RMB exchange rate in the second half of the year, Wang Chunying said on the above occasions that the RMB exchange rate will remain basically stable at a reasonable and balanced level in the second half of the year.
"From the perspective of exchange rate expectations, indicators related to foreign exchange forwards and options show that there is no obvious expectation of appreciation and depreciation of the RMB exchange rate, and market players generally maintain a rational and orderly trading model." Wang Chunying said that the trend of the RMB will be affected by foreign exchange supply and demand and international Influenced by multiple factors such as the financial market, there may also be some fluctuations in the short term, which may rise and fall. The RMB exchange rate will remain flexible and float in both directions, and will generally remain basically stable at a reasonable and balanced level.
CITIC Securities pointed out that in the short term, on the one hand, the RMB has strong support from my country's exports, on the other hand, it may still be under the pressure of the US dollar index rising. Under the relatively balanced long and short forces, the recent trend of the RMB may depend more on the A-share market. The performance of the stock exchange has strengthened, and its essence reflects the expectation of domestic macroeconomic fundamentals to be repaired. In the medium term, the follow-up needs to pay attention to the changes in domestic exports and the trend of the US dollar index. If exports remain resilient and the US dollar index shows an inflection point due to the further decline of the fundamentals of the US economy, then the RMB may return to strength.
Source: The Paper, Chinanews.com