Retreat more than a thousand points for eight consecutive days

The value was still rising vigorously a month ago, but now it is falling again and again.

On June 24, the central parity of the RMB exchange rate against the US dollar was reported at 6.4824 yuan, a depreciation of 203 points, marking the eighth consecutive day of devaluation, with a cumulative depreciation of 968 points. Compared with the high point in early June, the accumulated depreciation was 1252 points.

Retreat more than a thousand points for eight consecutive days
Source: Wind

It is worth noting that there was little change in the market exchange rate yesterday. Today’s central parity rate was not only lowered by a large margin, but also lower than the closing level of the market exchange rate yesterday, showing signs of leading in the direction of depreciation.

Market participants pointed out that the recent trend of the RMB exchange rate has fluctuated sharply, echoing the “two-way fluctuations”, and also explained that “don’t bet on the appreciation or devaluation of the RMB exchange rate. Long-term bets will lose. Expectations for the appreciation of the renminbi exchange rate have been reversed.

Thousand points plummeted

Continuous appreciation is a thing of the past

Since June, the RMB exchange rate has undergone a seamless switch from appreciation to devaluation. On the 23rd, the offshore renminbi exchange rate fell below 6.49 yuan.

As of the close on June 23, the onshore RMB exchange rate was reported at 6.4808 yuan, and the offshore RMB exchange rate was reported at 6.4787 yuan. Regardless of whether it is onshore or offshore, the appreciation of the renminbi in May has basically been wiped out.

Calculated based on the closing data on the 23rd, compared with the high point at the end of May, the onshore RMB exchange rate has adjusted back by 1,243 points and the offshore RMB exchange rate has been adjusted back by 1,253 points. The adjustment range is close to 2%.

These figures show that the previous situation of rapid and continuous appreciation of the RMB exchange rate has become the “past tense.”

In April and May of this year, the RMB exchange rate against the U.S. dollar quickly appreciated by about 3%, setting a new 3-year high. The renminbi exchange rate went from accelerated appreciation to rapid devaluation, which took only more than a month before and after, vividly explaining that “two-way fluctuations are the norm.”

Source: Wind

Expected reversal

Mid-price adjustment implies unusual signals

Insiders said that today’s adjustment of the central price is somewhat unusual. On the one hand, the median price was lower than the closing price of the onshore and offshore market exchange rates on the 23rd, showing a depreciation direction; on the other hand, the median price range was also greater than the market exchange rate depreciation on the 23rd-on the 23rd, onshore, The offshore renminbi exchange rate depreciated by 75 points and appreciated by 17 points.

“Whether the depreciation signal revealed by the middle price is sustainable, we need to continue to pay attention to it.” The industry insider said.

In the view of some industry insiders, the recent rapid appreciation of the RMB against the US dollar has further deviated from its previous rapid appreciation and a more determined attitude of adjustment, indicating that the expected appreciation of the RMB exchange rate has rapidly weakened or even reversed.

In late May, individual research views on the renminbi exchange rate acted as a “combustion aid” for appreciation. Driven by domestic and foreign funds, the renminbi exchange rate has accelerated its deviation from fundamentals.

At this juncture, the central bank and other relevant departments made clear public announcements, strengthened communication with the market, and adopted measures such as raising the foreign exchange deposit reserve ratio of financial institutions to “cool down” the over-excited market in a timely manner and avoid further overshooting of the RMB exchange rate.

Some market participants reported that the RMB exchange rate is expected to quickly “fading” in the near future, and some of the funds that previously bet on unilateral exchange rate appreciation have suffered large losses or even “exploded their positions.” Although some companies settled foreign exchange at rallies during the exchange rate adjustment process, the RMB exchange rate continued to adjust, showing a certain momentum of spontaneous devaluation.

Market participants further pointed out that the recent rebound in the U.S. dollar index and the spontaneous adjustment of the RMB exchange rate confirmed previous authoritative judgments about the overshoot of the RMB exchange rate. At the same time, the various actions of the regulatory authorities have highlighted the bottom line thinking of preventing disorderly fluctuations in the RMB exchange rate.

U.S. dollar brewing counterattack

RMB exchange rate may be under pressure

Looking forward to the next trend of the RMB exchange rate, the industry’s views are regaining consensus, that is, basic stability is the general trend, and two-way fluctuations are the norm. In the short term, devaluation risks need to be vigilant.

The self-discipline mechanism of the foreign exchange market recently issued a document saying that it is necessary to be highly vigilant against the risk of devaluation of the RMB exchange rate. Factors that may trigger the devaluation of the RMB exchange rate in the future include the Fed’s withdrawal from the quantitative easing monetary policy, the strong recovery of the US economy and the strengthening of the dollar, the gradual control of the global epidemic and the restoration of supply capacity The pressure on China’s exports, the bursting of the US asset bubble, and the rising global risk aversion, triggered the return of funds to the United States.

“Various signs indicate that the Fed’s policy is turning to hawks.” Some researchers said that the US dollar index has opened up space, and it is necessary to be more vigilant about the risk of devaluation of the RMB exchange rate.

“The result of the Federal Reserve meeting made the dollar rebound sustainable, which increased the risk of further correction of the RMB exchange rate in the short term.” said Li Liuyang, chief foreign exchange analyst of China Merchants Bank’s Financial Market Department.

Some institutional sources said that the recent central bank’s intensive propaganda may be due to the changes in the external environment, especially the possible tightening of the Fed’s monetary policy, which may lead to the risk of violent fluctuations in the foreign exchange market. Companies should learn from this, adhere to the “risk-neutral” concept, and manage their own exchange rate risks.

Source: Wind

From a longer perspective, experts believe that there will be no unilateral appreciation or devaluation of the RMB exchange rate.

Zhang Ming, deputy director of the Institute of Finance of the Chinese Academy of Social Sciences and deputy director of the National Finance and Development Laboratory, stated that if the renminbi exchange rate continues to fluctuate in both directions near the equilibrium level, the central bank will not interfere with the exchange rate; if the renminbi exchange rate appreciates or depreciates too quickly, And the sustainability is strong, it does not rule out the central bank to intervene through a variety of measures.

Zhu Fangcao, investment manager of the Asset Management Department of the Bank of Tianjin, said that the current foreign investment promotion logic for the appreciation of the renminbi is still in place, but the market’s views on exports and the trend of the dollar have intensified. Combined with the stability maintenance signal transmitted by the central bank, it is difficult for the renminbi exchange rate to appear unilaterally. There is a high probability that the market will fluctuate in both directions.

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