RMB exchange rate approaches 7 yuan

After three consecutive days of appreciation, the onshore and offshore markets of the RMB continued to rise on the morning of October 14. The onshore RMB exchange rate against the US dollar rose above 7.05 in the morning of that day and has appreciated more than 1000 points in the last four trading days. Analysts pointed out that the appreciation of the RMB exchange rate is mainly influenced by the favorable factors of Sino-US economic and trade negotiations, and then the overall stability of the RMB exchange rate will be a probable event. If the international situation is further optimistic, the RMB exchange rate does not rule out the possibility of returning to the 7 yuan threshold.

4 trading days RMB exchange rate appreciated 1000 points

on October 14, the intermediate price of RMB exchange rate against US dollar was 7.0725. After opening at 7.0827 on the same day, the onshore RMB exchange rate against US dollar rose successively in the morning to break the four barriers of 7.08, 7.07, 7.06 and 7.05, with the highest appreciation reaching 7.0494, with the highest appreciation of more than 500 basis points compared with the closing price on the previous trading day. Subsequently, the exchange rate of the onshore RMB against the US dollar declined to 7.06470 at 17.30 p.m.

In terms of reflecting more international investors'expectations of the offshore RMB-US dollar exchange rate, on October 14, the offshore RMB-US dollar exchange rate began to depreciate slightly after opening at 7.08750, and then climbed all the way around 9.30 a.m. from the lowest 7.09370 to 420 points, the highest to 7.05095, approaching the 7.05 threshold, which was more than 370 points higher than the closing price of 7.0882 on the previous trading day. However, in the afternoon, the offshore RMB exchange rate against the US dollar fluctuated, and as of 17.40, the offshore RMB exchange rate against the US dollar was 7.08010, close to the opening price of the day. Journalists from Beijing Business Daily noted that the appreciation of the RMB against the US dollar was significant in terms of the value of the last four trading days. The data from Tonghuashun show that on October 9, the onshore RMB exchange rate closed at 7.13150 against the US dollar, the lowest at 7.15330 on that day. Compared with the high of 7.04940 on October 14, the onshore RMB exchange rate has appreciated by more than 1000 points. In terms of the offshore RMB exchange rate, on October 9, the offshore RMB exchange rate closed at 7.13820 against the US dollar, with a minimum of 7.16750 on that day. Compared with the intraday high of 7.05095 on October 14, it has appreciated by more than 1100 points.

Many industry analysts told Beijing Business Daily that the recent rise in the exchange rate of RMB is mainly influenced by the news of progress made in Sino-US economic and trade negotiations. At the same time, the situation of economic and trade negotiations in the next stage will still affect market sentiment from the level of market transactions. Wang Hongying, president of China (Hong Kong) Institute of Financial Derivatives Investment, told Beijing Business Daily that the recent appreciation of RMB is mainly influenced by favorable factors of Sino-US trade negotiations, which will further increase China's export trade share in the future, and the market is generally optimistic about China's economic situation in the future. In the longer term, despite the so-called trade frictions between China and the United States in the first three quarters, the overall performance of China's economy is relatively stable. Under such a background, market investors are generally optimistic about the RMB. Other analysts point out that the improvement of market sentiment will trigger a sharp appreciation of the RMB exchange rate in the short term. After the market sentiment recedes, the medium-term trend of the RMB exchange rate is still closely related to the domestic fundamentals. In fact, in order to maintain the stability of the RMB exchange rate, the central bank has offered the central bank bills in the monetary policy box many times this year. On September 26, the central bank successfully issued 10 billion yuan of central bank bills over a six-month period in Hong Kong. It is understood that since November 2018, the Central Bank has issued 11 issues of central bank bills in Hong Kong, totaling 130 billion yuan. The maturities are mainly three months, six months and one year. The Youth Research Group of the Monetary Policy Division of the Central Bank recently wrote that since the end of 2018, the People's Bank of China has issued central bank bills directly to offshore market participants in Hong Kong, and has now issued 11 issues on a rolling basis, establishing a normal mechanism for issuing central bank bills in Hong Kong. In the critical period of increasing uncertainty of external shocks and long-term impact, the activation of central bank bills will have a promising effect on promoting the internationalization of RMB and stabilizing exchange rate expectations.

Today, the onshore and offshore RMB continue to rise, and the following exchange rate trend has also attracted much attention. Wen Bin, chief researcher of Minsheng Bank of China, told Beijing Business Daily that, in the medium and long term, the trend of exchange rate depends on the fundamentals of China's economy. With the increasing marketization of RMB exchange rate formation mechanism, the exchange rate of RMB against US dollar will still keep a two-way fluctuation at a balanced and reasonable level.

Wang Hongying pointed out that the technical devaluation of RMB in the previous stage basically reflects the current economic situation of China. Influenced by the short-term Sino-US trade negotiations, China's economy has further stabilized. It will be probable that the overall stability of the RMB exchange rate will rise. "If China's new economy and big consumption can replace the traditional economic growth mode to a certain extent, then the stable rise of the RMB will be a big pattern. If you are affected by some unpredictable Black Swan events, there is a small probability of devaluation. Looking back on August 5, this year, the RMB-US dollar intermediate price fell 229 points to 6.9225 from the previous day, breaking the 6.90 threshold, and the lowest depreciation of the intermediate price since December 3, 2018. At the same time, the onshore and offshore RMB both fell below the "7" level on the same day. Since "7" is regarded as an important psychological barrier with indicative significance for the RMB exchange rate, breaking the "7" exchange rate is likely to affect market sentiment, which attracts much attention. From Wang Hongying's point of view, China's GDP in the medium and long term