Interest Rate Cut Stimulates RMB Exchange Rate To Reach A New High In Nearly Eight Months

　　 Middle price Set an eight month high

On November 24, the first trading day after the interest rate cut, the spot exchange rate of the RMB against the US dollar opened at 6.1280 points, 31 basis points lower than the closing price of the previous trading day, and then continued to depreciate in a volatile way, finally ending at 6.1417 points, a 168 basis points drop throughout the day, setting a new low since the end of September this year.

Although the spot exchange rate of RMB fell sharply on that day, the central parity rate against the US dollar remained relatively stable. According to the data from China Foreign Exchange Trading Center, the central parity rate of RMB against the US dollar on November 24 was 6.1420, only 33 basis points lower than the previous trading day, indicating that the authorities adjust the RMB through the central parity rate exchange rate The intention of maintaining relative stability is obvious.

Affected by this, on November 25 and 26, the value of RMB against dollar The central parity rate then turned around and rose. The two transactions rose 66 basis points, the highest level since March 20 this year. By the end of November 26, the spot exchange rate of RMB against the US dollar had appreciated by 24 basis points over the previous trading day.

Data from the China Foreign Exchange Trading Center shows that the central parity rate of the RMB against the US dollar reached 6.1320 on November 27, 34 basis points, which has risen for three consecutive trading days, hitting an eight month high since March 14 this year. On November 27, the spot exchange rate of RMB against the US dollar opened at 6.1377, an appreciation of 12 basis points. Although it was still lower than the level before the interest rate cut, it also rose for three consecutive trading days.

In this regard, market traders pointed out that the strengthening of the central parity rate of the RMB against the US dollar in the last three trading days was related to the continuous decline of the overnight US dollar, but compared with the consolidation of the high dollar index and the decline of the spot exchange rate of the RMB against the US dollar, The strength of the RMB against the US dollar indicates that the management intends to intervene in the market expectation after the interest rate reduction to prevent the rapid rise of the RMB depreciation expectation.

　　 Phased appreciation of more than 10%

Since the 7th session of this year, the US dollar index has been surging all the way, ushering in a very rare trend of strong rise in recent years. According to reporter statistics, since the US dollar index rose from 79.740 on July 1 this year to 88.463 on November 24, it has reached a new high since the end of May 2010, with the largest increase of nearly 11%. At the same time, the currencies of Europe, Japan, Australia and other major developed economies in the world have weakened rapidly in recent months. In addition, the currencies of emerging markets such as Russia, India, Brazil and other countries have also experienced sharp depreciation due to the continuous strength of the US dollar.

However, the reporter found that the RMB exchange rate continued to strengthen significantly in the face of the sharp depreciation of domestic currencies in many economies around the world. According to statistics, since the appreciation of the exchange rate of RMB against the US dollar in early July, the largest periodic appreciation during this period has exceeded 1%. Even though the central bank launched a powerful easing drug to cut interest rates last weekend, the appreciation of the RMB against the US dollar has not stopped. At the same time, in the second half of this year, the RMB appreciated by 10% against the euro, yen, Australian dollar and other major non US currencies, and its strong characteristics are more obvious.

As we all know, in general, the RMB exchange rate is negatively correlated with the US dollar index, that is, the US dollar appreciates and the RMB depreciates; The US dollar depreciated and the RMB appreciated. Why does the RMB exchange rate rise sharply against the US dollar when the US dollar index keeps rising?

Market traders pointed out that the main reason is that China currently has a "managed floating exchange rate system". In addition, if the RMB depreciates significantly, it is likely to cause the rapid withdrawal of hot money that has entered the country in a large scale before, thus bringing certain financial risks to the Chinese economy. Especially in the current environment of currency devaluation in Europe, Japan and other economies, the expectation of RMB devaluation is strong. Once the long-term devaluation channel of RMB is opened, the economic and financial risks caused by the massive withdrawal of hot money will increase. Therefore, the central bank will ensure that the exchange rate does not depreciate, and at most it will only moderate a correction. On the whole, the RMB exchange rate will remain firm, and even the possibility of further appreciation will not be ruled out.