The RMB "Break 7" is not terrible. The key is to do a good job of risk management

On September 15, the offshore RMB fell below 7.0 against the US dollar, and on September 16, the RMB against the US dollar also "broke 7". This is the first time since July 2020 that people have "broken 7" against the US dollar exchange rate. On September 16, the inter -bank foreign exchange market price was 1 US dollars of RMB 6.9305, which was also on the edge of "Break 7". The RMB against the US dollar "breaks 7", which has attracted great attention in the market.

Comic: RMB exchange rate breaks "7" map/visual China

The RMB against the US dollar "breaks 7" is caused by multiple international and domestic factors.

At the international level, the Fed continues to raise interest rates. If the interest rate hike is large, the duration is long, and the US dollar continues to strengthen, it will inevitably allow currency in major countries and regions such as Japanese yen, euro and RMB to be forced to depreciate. Recently, the Fed Chairman Powell and others have repeatedly emphasized that they will continue to raise interest rates in the future. The facts and strong expectations of the Federal Reserve ’s interest rate hike further strengthened the decline in the US dollar index, the decline in the exchange rate of non -US dollars such as the yen, the pound and the euro, and the depreciation of the yen and the euro on the US dollar. The market's expectations for the US dollar are optimistic, and the yield of 10 -year Treasury bonds in the United States has continued to rise. The United States Goldman Sachs even predicts that at the end of this year, the 10 -year Treasury yield of US 10 -year Treasury bonds will rise to 3.75%, reaching a peak of 4.0%in 2023. The US dollar continues to appreciate, and the United States has become a temporary winner and transferred risks to other countries.

At the domestic level, from January to August, China's major economic indicators are rapidly returning to growth, and the overall trend of domestic economy is unchanged. However, affected by the prevention and control of the new crown pneumonia, the downward pressure on the economy is still large. In order to stabilize the RMB exchange rate market, on September 5th, the People's Bank of China announced that starting from September 15, the reserve ratio of foreign exchange deposits of financial institutions has been reduced by 2 percentage points to 6%. In order to cooperate with the realization of macroeconomic and social goals such as "steady growth", on September 15, the People's Bank of China announced that the 400 billion yuan interim loan convenience (MLF) operation and 2 billion yuan 7 -day reverse repurchase operation, the bid interest rates were respectively separated respectively. Maintain 2.75%and 2%unchanged. The adjustment of foreign exchange policies and monetary policy aims to further stabilize the foreign exchange market and the expectations of stabilizing growth. However, the changes in the domestic market also put pressure on the exchange rate of the RMB against the US dollar.

Photo/Vision China

For these, China must be prepared for psychological preparations and promotion measures in order to further cope with the risk of exchange rate changes. However, from the past experience, the exchange rate of the RMB against the US dollar fell "breaking 7". It is not terrible. The key is that China must do a good job of risk management and expected management. For enterprises involving foreign trade and international investment, monetary options, direct RMB settlement and other methods should be used to hedge the exchange rate risk of RMB against the US dollar. Essence Relevant functional departments of the People's Bank of China should take positive measures to guide enterprises to respond to exchange rate risks, while further adopting a stable exchange rate policy measures.

As long as China actively responds to do a good job of stable growth and exchange rates, the long -term trend of China's economy stability will not change, and the impact of exchange rate market fluctuations on China's economy and enterprises will be within the controllable range.

Author: Deputy Dean and Professor of the School of Economics, Southwest University of Finance and Economics of Southwest University of Finance and Economics

Responsible editor: Le Shui Anran Yuxin

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