The high level of the US dollar index fell, superimposed on the strong demand for foreign exchange settlement, and the RMB exchange rate has risen steadily recently. On October 20, the onshore and offshore RMB exchange rates against the US dollar once recovered the 6.38 mark. Among them, the onshore RMB exchange rate reached 6.3794, and the offshore RMB exchange rate once rose to 6.3734. On the 19th, the onshore and offshore RMB exchange rates broke through the important psychological threshold of 6.40, breaking the previous consolidation pattern for four consecutive months. Industry insiders believe that the RMB exchange rate has continued to rise recently, driven by the weakening of the US dollar index, the support of economic fundamentals and the help of sentiment. Recently, the return of global risk sentiment has driven the rapid decline of the US dollar index. As of the press time of October 20, the US dollar index had reported 93.8, which was significantly lower than the high of 94.5 a week ago. In addition, affected by the strong growth of exports, the market demand for foreign exchange settlement continued to be strong. CICC believes that the expansion of trade surplus has driven the demand for foreign exchange settlement of export enterprises. Recently, transactions of selling US dollars and buying RMB have been relatively frequent. According to data released by the General Administration of customs, China's trade surplus in the third quarter of this year was US $181.5 billion, an increase of about 19% over the same period last year. In addition to the recent strong export growth, the tight supply of offshore and onshore RMB foreign exchange markets is also an important driving factor. CICC said that in the offshore market, HIBOR RMB lending rate generally showed a volatile upward trend, and recently hit a new high this year, reflecting the relatively tight supply of offshore RMB liquidity. Correspondingly, there is a tendency of "siltation" of domestic US dollar liquidity. Tao Chuan, chief Macro Analyst of Soochow securities, believes that the liquidity index shows that the relative abundance of US dollar liquidity in September has reached a new high since the exchange rate reform in August 2015. In terms of market sentiment, the RMB broke through the early shock range, and the market trading volume was obviously large. On Tuesday, the spot inquiry trading volume in the inter-bank market expanded to more than US $50 billion, the largest one-day trading volume in nearly five months. On October 20, the trading volume was $45.5 billion, still at a recent high. "This time, the RMB exchange rate broke through the early shock range, triggered short stop losses, amplified market sentiment and intensified RMB appreciation," said Li Liuyang, chief foreign exchange analyst of China Merchants Bank's financial market department. In the follow-up, supported by liquidity and export factors, the RMB will remain stable and the probability will remain in range fluctuation. CICC expects that tight short-term liquidity and strong export growth will still support the RMB exchange rate. Before the actual tightening of US dollar liquidity, the approximate rate of RMB exchange rate will show a range fluctuation trend. Yang aozheng, chief Chinese analyst of fxtm Futuo, said that the strong momentum of the RMB may continue to the end of this year and the beginning of next year, and even to the beginning of the next interest rate increase cycle of the Federal Reserve. Technically, the next key support of the US dollar against the RMB exchange rate is at the 6.35 level, and the RMB exchange rate will fluctuate in a strong range from 6.35 to 6.45. Li Liuyang believes that in the short term, the trend of RMB is still relatively strong, and 6.35 is an important resistance level. In the medium and long term, with the fermentation of the Fed's expectation of raising interest rates, the US dollar index has room to rebound, and the RMB exchange rate is expected to fluctuate in both directions in a larger space. (outlook new era)