[Chief Observation] RMB 7. The storm of the foreign exchange market will be resurrected in the seven times

Economic Observation Network reporter Ouyang Xiaohong

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It is time to test the toughness and management of the renminbi.

On September 7, the offshore RMB (CNH) against the US dollar and the dollar (CNY) reported to the US dollar at 6.9972､6.9808, a new low of two years in double years; Even if the People's Bank of China has "shot" the stable exchange rate a few days ago: announced that the foreign exchange deposit reserve ratio was reduced from 8%to 200 basis points to 6%, which came into effect from September 15. The "RRR cut" information was released, and the CNH once increased from 6.9537 to 6.9359. On May 15, the People's Bank of China also reduced the foreign exchange deposit reserve ratio from 9%to 8%.

On the same day, non -US currency sorrowful: the euro fell to 0.9876 against the US dollar, renewing a 20 -year low; the yen fell below 145 to the US dollar, and continued to set a new low in 1998; The US dollar fell to 1381, renewing a new low in 2009. The US dollar index station was 110.2, renewing a 20 -year high.

On September 8th, the RMB's intermediate price was reported at 6.9148, and the CNH and CNYs were reported to 6.9581､6.9545; the euro was reported to the US dollar at 0.9980, and the US dollar index was reported at 109.65; the US dollar fell slightly, and non -US currencies got a little breathing. This may also be related to the European Central Bank Monetary Policy Conference. As market expectations, at 2:15 pm local time, the European Central Bank issued interest rate resolutions: historicity will raise 75 basis points in three key interest rates, and emphasize that the inflation will be further increased, because the inflation rate is still too high, and it may be very good at very much. It remained on the goal for a long time. As a result, the euro was boosted, and the euro rebounded to 1.003 on that day.

On the same day, one thing happened: Queen Elizabeth II, who was reigned for 70 years, died, including suffering from the British economic prospects and stronger dollars. Nian low. But the next day, the pound was reported to the US dollar 1.1602, an increase of 0.83%within the day.

On September 9th, it may continue to benefit from the booster of the European Central Bank's sharp interest rate hike. The euro reported to the US dollar 1.0074, an increase of 0.77%within the day; the US dollar index rose to 108.63, CNH reported 6.9239, CNY6.9226; Essence

As far as the euro is concerned, the market has previously reflected nearly 80 % of the possibility of 75 basis points. In the past three months, the euro has depreciated by 20%, and the European central bank officials are anxious to stabilize the euro; this may help the European Central Bank trying to inhibit inflation through tightening policy. The European Central Bank's radical interest rate hike also means that its economic recession also has to fight inflation.

The global high inflation is baked, and the international exchange market storm, which was set off by Qiangfeng, has become more and more intense. During the year, the euro's exchange rate against the US dollar fell more than 15%, and the market even believed that the depreciation of the euro seemed to have just begun; the pound fell 15%against the US dollar; the yen had fallen by more than 18%to the US dollar;

During the year, the exchange rate of the RMB to the US dollar actually had two rapid depreciation: from April 20 to May 13, 2022, the intermediate price of the RMB against the US dollar depreciated by 6.1%; The intermediate price of the US dollar exchange rate depreciates 2.7%. Perhaps the depreciation of this wave of non -US currency will continue, if the US dollar index is strong.

When the twice of the RMB diverted, it was also the time when the People's Bank of China "shot" twice; the two "reduction" were designed to stabilize the exchange rate to prevent the renminbi from devaluation. Moreover, in the current policy toolbox, the People's Bank of China has re -introduced counter -cyclical factors to slow down the depreciation of the RMB to the US dollar.

According to Lu Ting, the chief economist of Nomura Securities, the recent actions of the People's Bank of China have shown that the RMB exchange rate against the US dollar has attracted much attention. First, Chinese management believes that the RMB against the US dollar reflects economic and strength to some extent. Secondly, the sharp depreciation of the RMB against the US dollar may affect domestic emotions and accelerate capital escape. Because 7.0 may be considered an important psychological level, when the US dollar/RMB is close to this level, China seems to be particularly vigilant.

However, the RMB against the US dollar did not break the "7": once in August 2019, and one in May 2020. The former has iconic significance; the latter's market response is slightly plain, and its attention is not as good as the RMB 7. But these two times, the People's Bank of China has directly or indirectly vocalized, aiming to stabilize confidence and soothe market emotions.

Three years ago, the renminbi jumped lightly, and passed the psychological pass that had been tangled for four years, and also broke free of 7 restraints. At that time, the historical coordinates were: the Federal Reserve ’s first interest rate cut+tariff increase+financial opening.

At that time, our mentality was "broken, stone can break, but not to be strong." On August 8, 2019, the middle price of the yuan was reported at 7.0039, 43 basis points were opened; It has also plummeted; the central bank of China has a lot of policy confidence in the statement of the 7th day of breaking the 7th day.

At that time, the People's Bank of China explained that due to the influence of unilateralism and trade protectionist measures and expected tariffs on China, the RMB has depreciated on the US dollar exchange rate and exceeded 7 yuan. This is the reflection of market supply and demand and international exchange market fluctuations. At this time, the Federal Reserve interest rate hike+strong US dollar+high inflation+repeated epidemic situation+domestic and foreign economic pressure+energy crisis, and the Russian -Ukraine conflict, such as the RMB, decreased against the US dollar, but compared to other non -US currencies, it is still compared to other non -US currencies. More firm.

As Liu Guoqiang, deputy governor of the People's Bank of China, recently said that the US dollar has appreciated 14.6%since this year. In the context of the appreciation of the US dollar, other reserve currencies in the SDR basket have depreciated sharply, and the RMB has also depreciated about 8%, but as other non -US dollar currencies Compared with the minimum depreciation. He believes that the renminbi does not have a comprehensive depreciation.

Thanks to the long -term good fundamental and strong economic toughness of the Chinese economy, Liu Guoqiang said that at present, the Chinese foreign exchange market is operating normally, the flow of cross -border funds is orderly. Although the overflow effect of the US monetary policy is affected, it can affect the controlled controllable but controlled the controlled control. Essence

According to Lu Ting's statement and observation: Since the beginning of this year, the value of the RMB to the CFETS basket does not seem to be unstable. For example, from the end of 2021 to early March, it rose 4.2%. From early March to early May, it fell 6.2%. From late May to mid -July, rose 3.8%. After that, another 1.8%.

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This time, this time is really different. After all, the exchange rate followed the interest rate. Under the temptation of interest spreads, the global profit -seeking capital began to return to the United States. In the first half of the year, outside the ruble, non -US currency fell almost across the board, and the derogation of the RMB may also be inevitable.

The problem is that, before, we felt that "7" was just an integer passage, and it was broken. The same is true. After the RMB breaks 7, thanks to economic toughness and endogenous power, it quickly rebounded. The RMB appreciated for two consecutive years (2020､2021) for the US dollar. Now that the global inflation is high, outside the Bank of Japan, central banks may not want to see the depreciation of the local currency.

Mentioning the trend of RMB, Liu Guoqiang said that the future world's recognition of the RMB will continue to increase, which is a long -term trend. But in the short term, two -way fluctuations are a normal state, and there will be no "unilateral cities". Moreover, "The exchange rate point is not allowed. Don't bet on a certain point. Reasonable balance, basic stability are what we like to see, we also have the strength to support, I don't think there will be any accidents, and it will not be allowed."

Objectively speaking, in the context of high inflation, based on different economic cycles, the Fed that is currently full and vowed to fight inflation may continue to raise a significant rate of interest rates. Still adhere to the stable policy orientation; it may even be loose. As Liu Guoqiang said: Adhering to the stable monetary policy, strong and effective use of policy tools, taking into account the relationship between stable growth, stable employment and inflation, and cope with various risks and challenges.

According to Zhang Ming, deputy director of the Institute of Finance of the Chinese Academy of Social Sciences and deputy director of the National Financial and Development Laboratory, the most important reason for the depreciation of the RMB this year is the rapid widening of the long -term spread between China and the United States. At present, the US economic growth is very strong (significantly higher than the potential growth rate), while China's economic growth rate is relatively weak (significantly lower than the potential growth rate). In this context, the Fed has implemented the accelerated monetary policy, such as from the width of the reduction in the scale to continuous interest rate hikes to the accelerated shrinkage; and the central bank of China has implemented a relatively loose monetary policy, such as the reduction and more this year's reduction and more. Rest -rate interest rate cuts.

He believes that the differences in monetary policy between the two countries have caused reverse changes in long -term interest rates between the two countries, that is, the 10 -year Treasury yield of 10 -year Treasury bonds has increased significantly, and China's 10 -year Treasury yield has decreased significantly. In April this year, the long -term spread of China and the United States began to hang upside down. So far, the yield of 10-year Treasury bonds in the United States is 40-50 basis points higher than that of China's 10-year Treasury bond yield. The spread of China and the United States has continued to expand, which will trigger the flow of cross -border capital from China to the United States, thereby lowering the RMB exchange rate against the US dollar.

On September 7, the General Administration of Customs announced the trade data in August. According to RMB, China exported in August an increase of 11.8%year -on -year, with a previous value of 23.9%. Wu Chaoming, deputy dean of the Caixin Research Institute, analyzed this because of high bases and the slowdown of global economic slowdown. The basis of the same period from 2020-2021 is one of the reasons for the decline in export growth. From the perspective of the state, the growth rate of the exports of major trading partners has fallen comprehensively, and the growth rate of exports to the United States has dropped to negative value. From the perspective of products, the exports of mechanical and electrical products and labor -intensive products have fallen. The former export proportion continues to be lower than the same period of history, showing that domestic export pressure is relatively large. From the perspective of volume and price, the growth rate of most of the exports of most goods was significantly lower than last month, and the growth rate of export price growth was lower than the growth rate of quantity. The display quantity factor was the main reason for the decline in export growth in August.

Wu Chaoming believes that high base and demand recovery are the main reason for the sluggish growth rate. The average import growth rate of two years in the same period last year increased by 1.3 percentage points month -on -month, which formed a certain drag on import growth this month. From the perspective of volume and price, the growth rate of most commodities in imports continues to be negative, which is the main contribution of import growth, showing that domestic demand is still weak. "It is expected that the downward pressure on exports will increase in the second half of the year, but it is still tough."

This also means that the fundamental factor that supports the strengthening of the RMB exchange rate in recent years is changing. On the surface, the direct reason for the depreciation of this wave of RMB exchange rates is the strong US dollar cycle, and the differentiation of the Sino -US monetary policy+economic cycle; but essentially, the recovery of domestic economic fundamentals is still solid.

In the short term, the RMB breaks 7 or the probability incident, although the management does not want to see the RMB soft at this stage. On September 5th, the People's Bank of China announced again that the foreign exchange deposits were reduced; on September 7, CNH fell to 6.9972, but the end suddenly rose to about 6.96. The next day, the RMB's intermediate price was reported at 6.9148, and CNY was reported to 6.9502 and CNH. The total number of offshore RMB markets is small, and the RMB short is not dare to deal with the central bank's opponent, or escape or be beaten.

It is self -evident. Compared with Chinese foreign exchange reserves, the offshore RMB pool (total) is very small. The central bank may pass debt issuance and reduce standards, including directly using foreign exchange reserves to purchase offshore RMB "CNH, so CNH basically does not have the risk of excessive depreciation; more than, CNH often has a guiding effect on CNY.

Generally speaking, the market believes that when the RMB exchange rate is rapidly depreciating (or appreciation) in the short term, the central bank will intervene in the exchange rate.

Wang Yongli, the general manager of China International Futures Co., Ltd. and the former vice president of Bank of China, believes that the RMB exchange rate has formed a pattern of comprehensive balance of a basket of currencies. Prevent unilateral rise or depreciation, while preventing significantly appreciation and depreciation. So far, the changes in the RMB exchange rate are basically within the scope of tolerance.

Of course, Wang Yongli said that due to the differences in the economic trend of China and the United States and the trend of interest rates, especially the great depreciation of the US dollar, etc., such as the euro, yen, and pounds, and the sharp decline in foreign trade in August The US dollar rises rapidly against the renminbi and makes 7 a phased psychological point. In order to prevent the expectations of too poor expectations, the state and the central bank have taken action to stabilize the economy and employment, and delay the speed of breaking 7 to the US dollar exchange rate. This is understandable.

As the saying goes, do not underestimate the central bank, do n’t do it with the central bank, do n’t become the central bank ’s trading opponent, etc. It has its meaning. Of course, during the period, the price paid for this should not be underestimated. The "811" exchange reform is $ 1 trillion (foreign exchange reserves) for the cost of the exchange rate. This time, weighing the advantages and disadvantages, what will the central bank do?

"Time is slightly longer, and breakthrough 7 is not absolutely not allowed." Wang Yongli said.

The fundamental, whether to keep 7 is not important, it is important to consolidate the economic foundation and the renminbi to continue to cultivate internal skills.

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"The winner of the RMB 7 'is still in the real estate." The macro team of Soochow Securities believes that it depends on whether the real estate sales and residential loans can be significantly improved, and the Federal Reserve ’s interest rate hike is expected to cool down. Both of them need time to repair and adjust.

A good news is that the recently announced financial data of the central bank showed that credit recovery has risen significantly and the structure has improved. Wen Bin, chief economist of China Minsheng Bank, believes that with the increase in interest rate cuts and stable credit policies, the new credit in August has increased significantly compared with the previous month. In August, RMB loans increased by 1.25 trillion yuan, a significant increase of 571 billion yuan from the previous month, an increase of 39 billion yuan year -on -year.

In Wen Bin's view, the credit structure has been optimized, the financing of bills has increased significantly. In August, short -term loans (residents' short loans+corporate short loans+bill financing) increased a total of 339.2 billion yuan, a year -on -year increase of 23.2 billion yuan. Following June, it became the second year -on -year month -on -year month. The residential side, resident consumption confidence has recovered, policy help has rebounded, and resident loans have improved significantly.

Look at the logic of Soochow Securities: If you simply rely on the US dollar index to judge the yuan, then the RMB exchange rate will break 7 in this year. However, in addition, there are many factors unique to the Chinese economy and RMB that will affect the elasticity of the exchange rate, causing the RMB exchange rate to deviate from the "standard" of the US dollar. The influence of exchange rate influence in the market, such as foreign trade, spread between China and the United States, and policy intervention can be classified as "premium factor".

From the perspective of the "premium factor", the key to whether the RMB breaks 7 depends on the race of "real estate" and "export". Foreign trade and net export weights are the greatest, and the inflection point of deterioration of net exports may be supported by RMB before the fourth quarter to the beginning of next year. Advantage. Although the spread of China and the United States is upside down, the impact on the exchange rate behind it is not clear -the bond market funds flow out, and the equity funds may flow in under the expected economic improvement. Unless real estate (especially sales) can stabilize the rebound before the "Golden Nine Silver Ten" and the net export trend weakened, the RMB exchange rate may break 7 as early as September.

From the perspective of the macro team of Soochow Securities, the narrowing or inverted between China and the United States will cause bond funds to flow out, but equity funds are not necessarily. One of the "blind spots". Global bond funds will consider the spread when decision -making, but it is more important for equity funds to improve the marginal improvement of economic prosperity and whether the liquidity and interest rate environment remain loose. It seems that this is slightly different from Zhang Ming's view. Zhang Ming believes that the spread will cause cross -border capital to return to the United States and make the RMB exchange rate. In fact, although the exchange rate and equity assets are correlated, the inflection points of the two are quite similar; they are not inevitable. If the cause of the stock market falls is the evacuation of foreign capital, then the stable exchange rate will help stabilize the stock market. Conversely, the effect of stable exchange rate on the stable stock market is limited. Regardless of the exchange rate appreciation or the start of the stock market, it requires the support of the domestic economic recovery.

It is precisely during the important historical period, if the RMB exchange rate breaks 7 is considered a key point that induces depreciation and the risk of capital outflows, the unstable currency value may affect the overall economic situation, and defense 7 is a must -have for management. If this is the short -term RMB 7, 7 Urgent.

In fact, even if the renminbi breaks in the short term, in the future, with the lifting of the risk of the epidemic, the stability of real estate, China's economic growth has rebounded, and the US economy has gradually entered the recession. This can also be described as the RMB 7. After all, the market -oriented reform of exchange rates also requires the central bank to not intervene.

Under the international currency system of the US dollar "one yuan independent", the internationalization of the RMB is still obstructive; in this case, the renminbi still has to practice internal skills; don't forget that the exchange rate is a price, and it has regulating foreign exchange supply and demand in itself. The role of relationship.

E Zhihuan, a member of the IMI academic committee and chief economist of BOC Hong Kong, said that the international monetary system under the conflict of Russia and Ukraine shows a new competition pattern. Market currencies have also begun to explore the possibility of becoming international currency. In the future, the international currency sector may show the development trend of the "new Warring States Period", and enhance the internationalization of the RMB internationalization to face new challenges, which should accelerate the international development of the RMB from five aspects: 1. Seize the opportunity of the development of the digital economy; 2. Continue to be key The regional promotes the use of RMB trade, investment and commodity pricing; 3. The relationship between balancing policy -driven and market traction; 4. Continue to steadily expand opening up in the shore market, promote and improve the depth and breadth of the market with market openness, attract overseas investors Holding RMB assets; 5. Accelerate the construction of a Hong Kong offshore RMB business hub and expand the interconnection of the financial market.

Therefore, management may wish to find a balance between the urgency and slow exchange rate of the exchange rate and the market -oriented reform of the RMB 7; whether it is time to change the space or change the time in space, the wheel of history will not go backwards backwards. It should not go backwards, because China's economy should not change for a long time.

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