The continued strength of the RMB reflects the positive economic expectations
2023-02-03
On February 2, the RMB exchange rate strengthened, and the central parity rate of the RMB against the US dollar rose to a new high since August 2022. Experts said that under the background of the easing of external pressure and the obvious improvement of the domestic economy, the RMB exchange rate will show a trend of two-way fluctuations, moderate recovery and gradually approaching a long-term reasonable range. Foreign investment is optimistic about China's economic prospects, and the attractiveness of RMB assets has increased. Wind data of the 6.7 yuan barrier showed that as of 16:30 on the 2nd, the onshore RMB exchange rate reached a maximum of 6.7007 yuan against the US dollar, and the offshore RMB exchange rate reached a maximum of 6.7057 yuan against the US dollar, once knocking at the 6.7 yuan barrier. At the same time, the US dollar index continued its low volatility. As of 16:30 on the 2nd, the US dollar index was at 100.97, falling below 101. On February 1, US local time, the Federal Reserve announced a 25 basis point interest rate increase, slowing the pace of interest rate increase as scheduled, and the federal funds rate entered the range of 4.5% to 4.75%. The continuous rise of the RMB exchange rate has become a beautiful scenery in the foreign exchange market. As of February 2, the central parity rate of the RMB against the US dollar has increased by 2516 basis points since this year. As for the reason why the RMB exchange rate continues to rise, Li Liuyang, a foreign exchange expert of CICC, believes that since January, China's economy has continued to recover and the inflow of funds from the north has accelerated, and the RMB has shown a trend of appreciation. "In the context of the rapid recovery of China's economy, the inflow of securities funds, the strengthening of the demand for foreign exchange settlement and the weakening of the US dollar dominated the strong market of the RMB exchange rate in January," said Li Liuyang. Maintaining a reasonable and balanced level Under the background of the easing of external pressure and the improvement of internal factors, the RMB exchange rate will show a trend of two-way fluctuations, moderate recovery, and gradually approaching a long-term reasonable range. From the perspective of external factors, the interest rate increase of the Federal Reserve turned into the second half, and the market was worried about the economic prospects of the United States. The action on the dollar index could weaken, and the downward pressure on the RMB exchange rate was reduced. Li Liuyang believes that the slowdown of inflation in the United States drives the expectation of the Federal Reserve to raise interest rates down, and the expectation of economic stabilization in China and Europe drives the risk appetite to strengthen, which puts pressure on the dollar. Even though the short-term dollar index may rebound due to the change of risk appetite, the possibility of the dollar index returning to a new high due to the change of fundamentals is further reduced. From the perspective of internal factors, the latest released leading indicators send a positive signal of the recovery of the domestic economy and provide a good environment and support for the RMB exchange rate to operate at a reasonable and balanced level. "The economy is stable and financial, and the economy is strong and the currency is strong." Guan Tao, the global chief economist of Bank of China Securities, said that with the accelerated recovery of China's economy, China's economic prospects are generally optimistic at home and abroad, and the value of investment in RMB assets is concerned. The trend of RMB exchange rate is expected to achieve a reverse turn in 2023. Mingming, the chief economist of CITIC Securities, said that the expected improvement of the domestic economy played a positive role in the risk sentiment, and the A-share market was expected to continue to attract foreign capital inflows, and the trend of convergence of the Sino-US interest margin made the pressure of foreign capital outflow in the bond market slow down. Pang Ming, chief economist and research director of Jones Lang LaSalle in Greater China, predicted that, driven by a series of positive factors and positive expectations, the overall trend of the RMB exchange rate throughout the year would maintain a steady recovery, moderate strength, and gradually move towards the medium and long-term
Edit：wangwenting Responsible editor：xiaomai
Source：china.cn
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