Foreign Exchange Market Strong Winds Test RMB Trend

On the 10 day, the US dollar index broke through the 98 pass.

Sun Yu, chief Trading Officer of Yi Xin foreign exchange, analysed the fundamentals of the US economy and the Fed's interest rate hike is expected to ensure a long-term rise in the US dollar. At the technical level, the US dollar, which has risen to a new high for 11 years, is hard to say.

The future trend of RMB exchange rate has aroused concern.

The dollar strengthened, and the euro, yen, pound sterling, Australian dollar and emerging market currencies were eclipsed.

Since the beginning of this year, the "interest rate cut" has swept from Europe to North America and to the Asia Pacific region. More than 20 central banks have launched loose policies, and the "currency war" has also been followed by four smoke.

The depreciation rate of RMB against the US dollar in the first two months of this year is nearly 1%.

Especially in February, the spot rate of RMB against the US dollar approached the limit price several times.

Since March, the downward pressure on the RMB against the US dollar is still evident, and the spot rate has reached a new low for more than two years.

In the background of the US dollar entering the strong cycle, the RMB's spot exchange rate frequently approaching the lower limit, and the slowing down shift of China's economy, the market's expectation of RMB exchange rate has begun to change. The latest edition of the Standard Chartered RMB global index report predicts that the US dollar will continue to be strong in the short term. The chief economic analyst of Credit Suisse Asia, Tao Dong, predicts that the RMB will depreciate to 6.45 against the US dollar in the next 3 to 6 months.

RMB continued

It's not a good thing, it will further exacerbate the market's worries about the Chinese market.

Careful market participants have noticed that there are multiple indications that the decision-making departments are guiding market expectations through various measures.

First, the central parity of RMB against the US dollar narrowed sharply.

Xie Yaxuan, director of macro research at China Merchants Securities Research and development center, said that in early March, the US dollar index rose strongly.

The currency index has reached a new low, and the RMB exchange rate has stabilized. The middle price of the US dollar has not completely followed the US dollar index, which helps to dispel unnecessary worries in the market.

Second, the vice president of the central bank, Yi Gang, made clear during the two sessions that the renminbi would not join the devaluation army.

According to Yi Gang, from the real effective exchange rate and nominal effective exchange rate, the US dollar is the first strong currency and the renminbi is the second largest currency.

Yi Gang said that the RMB has entered a two-way fluctuation period, and the fundamentals continue to support the RMB exchange rate. In the long run, the renminbi will be a stable currency.

Sun Yu predicted that "in the next 6-12 months, the fluctuation range of the RMB against the US dollar will be at 6.15-6.35."

Third, this year's government work report proposes to "increase renminbi".

Two way floating elasticity "is different from last year's" two-way floating exchange rate expansion ".

Wang Tao, chief economist of UBS Securities, predicts that the yuan will only depreciate moderately this year, otherwise it will aggravate regional currency competitive devaluation, and it will also be harmful to China's own interests.