On May 6, the central parity rate of RMB against the US dollar was reported at 6.6332, down 660 basis points from the previous trading day. Since the middle and late April, the RMB exchange rate against the US dollar has changed its strength at the beginning of the year and walked out of a wave of rapid downward trend. From April 19 to 29, the central parity rate of the RMB against the US dollar was adjusted down to 2457 basis points. On May 5, the central parity rate of the RMB against the US dollar was reported at 6.5672, an increase of 505 basis points. This means that the central parity rate of the RMB against the US dollar has been lowered by more than 2000 basis points in the past two weeks. In this regard, Zhou Maohua, a macro researcher in the financial market department of Everbright Bank, believes that the recent trend of RMB is mainly affected by the short-term differentiation of China US fundamentals and policies. The domestic epidemic spreads in many places, the demand is restrained, and the supply chain of the industrial chain is blocked, which may also drag down the performance of foreign trade in the future; In order to curb high inflation, the Federal Reserve adopted a radical policy of raising interest rates and shrinking the table, which promoted the sharp strengthening of the US dollar index and triggered the weakening of non US currencies to varying degrees. At the same time, since the fourth quarter of last year, the strong performance of the RMB exchange rate has slightly exceeded expectations, which has been revised to a certain extent due to changes in the internal and external environment. In the early morning of May 5, Beijing time, the Federal Reserve announced that it would raise the federal funds rate by 50 basis points, and announced that it would start to shrink the table on June 1. Guan Tao, global chief economist of BOC securities, believes that the tightening of monetary policy by the Federal Reserve is one of the important factors affecting the trend of RMB exchange rate this year. Whether it is the weakness in mid and late March or the recent adjustment, it is basically driven by the offshore market. This reflects that after foreign capital reduced its holdings of domestic RMB financial assets, it purchased foreign exchange in the offshore market, driving the weakening of offshore RMB. With the Fed's expectation of raising interest rates continuously strengthened, the US dollar index continued to rise after April. Affected by this, major Asian currencies, including the Japanese yen and the Korean won, fell sharply against the US dollar, and the offshore RMB exchange rate was affected, exacerbating the decline of the RMB. "This exchange rate adjustment is the final result of the operation of the foreign exchange market under the comprehensive action of factors such as the rebound of the domestic epidemic, the fluctuation of the financial market and the convergence of the interest rate gap between China and the United States. The change of the exchange rate level is not the goal deliberately pursued by the policy." Guan Tao further said that in November last year, the people's Bank of China proposed for the first time that "the degree of deviation is directly proportional to the correction force". The recent sharp decline is a concentrated vent of market short pressure and belongs to market correction rather than policy guidance. Industry insiders believe that the recent exchange rate correction shows that the trend of two-way fluctuation of RMB exchange rate has not changed. This can not only give better play to the role of exchange rate stabilizing macroeconomic and adjusting the automatic stabilizer of balance of payments, but also reduce the operation cost of exchange rate risk hedging of RMB assets increased by overseas investment institutions. It is understood that previously, due to the continuous strengthening of the RMB exchange rate, many large overseas asset management institutions had to increase the risk hedging operation of exchange rate decline, which virtually weakened the overall rate of return of the RMB asset portfolio. Now, as the RMB exchange rate falls back to a reasonable valuation, the operational cost of exchange rate risk hedging will be reduced, which is conducive to boosting the yield of RMB portfolio. "Usually, the devaluation of RMB makes the imported goods and services priced in local currency more expensive, and the cost becomes higher for raw material importing enterprises; however, for some foreign trade enterprises with production factors in China, the devaluation of local currency can improve the export competitiveness to a certain extent. Therefore, the devaluation of RMB is a 'double-edged sword'." Zhou Maohua said. The moderate depreciation of the RMB against the US dollar has both advantages and disadvantages. The main disadvantages are that speculative financial capital may flow out intensively in a short time, resulting in an increase in the volatility of the domestic capital market. However, due to the existence of certain capital controls in China, the possibility of capital outflow causing market panic and even systemic risk is small. At the same time, the moderate depreciation of RMB is conducive to the continuation of the good momentum of domestic exports. What is the next trend of RMB exchange rate? Will the Fed's interest rate hike and contraction affect the trend of China's foreign exchange revenue and expenditure? Wang Chunying, deputy director of the State Administration of foreign exchange, said that in recent years, China's foreign exchange market has been increasingly resilient and has the foundation and conditions to adapt to this round of Fed policy adjustment. "In the future, the RMB exchange rate will fluctuate in both directions and remain basically stable at a reasonable and balanced level." Wang Chunying said that China's economy is relatively resilient, the long-term development trend has not changed, the balance of payments structure is stable, the current account maintains a reasonable scale surplus, and RMB assets still have long-term investment value, which will provide fundamental support for the basic stability of the RMB exchange rate. "In the short term, the RMB exchange rate may fluctuate against the US dollar, but the basis affecting the further depreciation of the RMB exchange rate has been significantly weakened. On the one hand, the effect of China's policy of helping enterprises and relieving poverty has gradually emerged, the resumption of work and production has accelerated, and the economy has stabilized and warmed up; on the other hand, China's foreign trade continues to maintain resilience, supporting the RMB exchange rate. In addition, the aggressive tightening of monetary policy by the Federal Reserve will inevitably pose a threat to the prospects of the US economy Drag on, coupled with the tightening financial environment, the market remains cautious about dollar assets currently at a high level of historical valuation. " Zhou Maohua said. According to the report released by industrial securities, although the RMB is facing some depreciation pressure recently, there is no need to worry too much about the large outflow of foreign capital, and the inflow of foreign capital into a shares is still a long-term trend. In the short term, after the panic outflow in March, overseas investors' concerns about the regulatory game between China and the United States have gradually eased, the superimposed market has been adjusted to a low level, and foreign capital has been able to maintain strong concentration and even return. In the medium and long term, although the nominal interest rate difference between China and the United States is upside down, the actual interest rate difference remains at a high level, the superposition of foreign capital is still low with a shares, and the inflow of foreign capital is still a long-term trend. Guan Tao analyzed that as long as the spread of the epidemic is effectively controlled, coupled with the forward and timely strengthening of macro policies, the prospect of economic recovery is clear, market confidence is restored, foreign capital may return at any time, and the RMB exchange rate will be supported again. (Xinhua News Agency)