The Accelerated Appreciation Of RMB Is Hard To Sustain.

The Yuan's exchange rate between the yuan and the US dollar hit a new high the day before yesterday, at 6.3772. After the euro broke through the 9 yuan mark at the beginning of the month, it also climbed at a steady pace, reflecting the sharp acceleration of RMB appreciation in the near future.

Although the market expects that there will still be room for growth in the fourth quarter of this year, it is difficult to accelerate the appreciation of the renminbi from the perspective of the deterioration of China's export prospects, the slowdown in economic growth and the easing of domestic inflation pressure.

RMB continued to appreciate, reduce Export enterprises Sales profits in the past can also be maintained through high capital yield and profit margins, but as workers' salaries rise and costs rise, the cost of exchange rate fluctuations is not easy to digest inside the enterprises. August PM I data show that the new export orders index fell to 48.3 level, the first time since May 2009 dropped 50 points below the expansion watershed. Coupled with the further deterioration of the European and American economies, the renminbi has further appreciated, causing a sharp increase in the risk of damage to exports and economic growth.

In August, the consumer price index dropped from 6.5% in July to 6.2%, and import inflation pressure eased slightly. Exports are weakening now. If the RMB continues to appreciate rapidly, it will affect exports. Economics Growth and decline will inevitably bring pressure on the central bank to ease monetary policy. We can see that the main risk of the rapid appreciation of the renminbi will lead to loosening of the domestic monetary policy, which is not conducive to controlling the risk of the real estate bubble.

The RMB exchange rate against the US dollar has risen by nearly 2500 basis points since January 4th of this year. Inflation pressures are weakening today. Trade With the narrowing of the surplus and the deterioration of the external environment of exports, the rapid appreciation of RMB is hard to sustain.