Foreign exchange "reduction" landing!Why can it "cool down" the depreciation of the renminbi?

Text/Xia Bin

"Reasonable and balanced, basic stability is what we like to see. We also have the strength to support. I don't think there will be any accidents or an accident." Liu Guoqiang, deputy governor of the Central Bank of China, attended a routine blower of the State Council today. When talking about the RMB exchange rate issue, Say such a paragraph.

Recently, a wave of depreciation of the RMB exchange rate has fallen, and the exchange rate of the U.S. dollar on the offshore and offshore RMB has fallen below 6.9. After Liu Guoqiang's speech, the People's Bank of China also shot.

The central bank announced this afternoon that starting from September 15, 2022, the foreign exchange deposit reserve ratio of financial institutions was reduced by 2 percentage points, that is, the foreign exchange deposit reserve ratio was reduced from the current 8%to 6%.

This is the second time the central bank has implemented a "reduction" of foreign exchange this year. On April 25 this year, the central bank decided that starting from May 15, 2022, the foreign exchange deposit reserve ratio of financial institutions was reduced by 1 percentage point, that is, the foreign exchange deposit reserve ratio was lowered from the current 9%to 8%.

The renminbi does not have a comprehensive depreciation, and there will be no "unilateral city"

Liu Guoqiang said that because China is an open economy, the RMB exchange rate will inevitably be affected by various factors. Recently, it is mainly the adjustment of the United States' overtime monetary policy. The US dollar appreciated by 14.6%this year. Under the background of the appreciation of the US dollar, other reserve currencies in SDR baskets have depreciated sharply. The RMB has also depreciated about 8%, but compared with other non -US dollar currencies, the depreciation is minimized.

Data show that from January to August, the euro depreciated by 12%against the US dollar, the pound depreciated by 14%, the yen depreciated 17%, and the renminbi depreciated by 8%.

"In the SDR basket, it should be said that in addition to the depreciation of the US dollar, the RMB is appreciated with non -US dollar currency, not to say that other currencies of the SDR basket are also depreciated." Liu Guoqiang said that in the SDR currency basket, a basic situation is The US dollar has appreciated, the RMB has also appreciated, but the appreciation of the US dollar is larger. "So, the renminbi has not been comprehensively depreciated."

Liu Guoqiang also said that the long -term trend of the renminbi is clear. In the future world, the recognition of the RMB will continue to increase. In the short term, two -way fluctuations will be a normal state and will not appear "unilateral cities". Don't bet on a certain point. "Reasonable and balanced, basic stability is what we like to see, we also have the strength support. I don't think there will be something wrong or an accident."

What does foreign exchange "reduction" mean?

Wen Bin, chief economist of Minsheng Bank, said that the reduction of foreign exchange deposit reserve rates for financial institutions means that the reserves of reserves paid by domestic financial institutions for foreign exchange deposits will help increase the liquidity of the US dollar in the market, and increase foreign exchange funds of financial institutions The ability to use is conducive to the stability of the RMB exchange rate.

Wang Youxin, a senior researcher at the Bank of China Research Institute, pointed out that the current foreign exchange deposits of the Chinese market are around $ 950 billion, and the deposit reserve ratio of 2 percentage points can be released by about $ 19 billion. The current market expectations and emotional changes are an important variable that affects the financial market. Judging from the past policy adjustment rhythm and effect, the introduction of policy will play an important role in the stable market expectations. It is expected that the RMB exchange rate will be controlled, and the RMB exchange rate will gradually return to orderly and smooth fluctuations.

Pang Yan, chief economist and director of research department of the Zhongliang Bank of China, said that the central bank decided to reduce the reserves of foreign exchange deposits of financial institutions by 2 percentage points, which can improve the ability to use foreign exchange funds in financial institutions and strengthen the management of foreign exchange liquidity in financial institutions. It can partially release foreign exchange liquidity, regulate the supply and demand relationship of the foreign exchange market, and fluctuate the smooth foreign exchange market.

What signal does foreign exchange "reduction" release?

Pang Ye bluntly stated that this clearly releases the expected foreign exchange market expectations and maintains the basic stable policy signal of the RMB exchange rate at a reasonable balance level. It can to a certain extent to a certain extent to inhibit the unilateral devaluation expectations of the RMB exchange rate and the possible "herd effect" that may occur. the goal of.

He believes that this policy movement shows that the relevant departments have begun to adopt appropriate policy tools and macro -prudential tools to show the confidence and determination to iron the market fluctuations and maintain the stability of exchange rates. The pressure of excessive depreciation of the renminbi promotes the balance of supply and demand for the domestic foreign exchange market, and re -return the RMB exchange rate to the basic stability at the reasonable and balanced level.

Wen Bin pointed out that due to the current affected by the Fed's accelerated tightening of monetary policy, the US dollar index once broke through the 110 mark, causing the devaluation of the passiveness of the RMB against the US dollar. The central bank's move to release a positive signal to the market is conducive to stabilizing RMB exchange rate expectations and avoiding irrational overruns.

Wang Youxin said that under the rapid interest rate hike expectations and the rapid upward pressure on the US dollar index, the RMB exchange rate and market emotions have changed significantly. At this time Supply and demand situation, release policy signals, and play a role in stabilizing exchange rates and market emotions.

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