2023-12-17 03:48:00
This week, the yuan continued to surge.
On December 15, the exchange rates of onshore and offshore RMB once morest the U.S. dollar once strengthened. The exchange rate of offshore RMB once morest the U.S. dollar rose above 7.10 for the first time in half a year. It rose by more than 200 points during the day, reaching a maximum of 7.0975. It then fell back by nearly 400 points, and still rose by more than 500 points throughout the week.
At the same time, the China Foreign Exchange Trading Center showed that on December 15, the central parity rate of RMB once morest the US dollar was reported at 7.0957, an increase of 133 basis points from the previous day, appreciating to the highest level since June 5, 2023.
Looking at the long-term cycle, in early November this year, the offshore RMB once morest the U.S. dollar was at 7.3415. Since then, the RMB has continued to appreciate. As of December 15, the offshore RMB once morest the U.S. dollar has risen by more than 2,000 points, with a cumulative appreciation rate of more than 2.8%.
On the news front, there is also good news coming from the domestic front. On December 15, the National Bureau of Statistics released data showing that in November, the total retail sales of consumer goods was 4.2505 billion yuan, a year-on-year increase of 10.1%, which was the fourth consecutive month of recovery and set a record since May.
At 2 a.m. Beijing time on December 14, the Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at 5.25%-5.5% for the third consecutive time, in line with market expectations. The “dot plot” that attracts the most attention from the market shows officials’ clear dovish shift in expectations.
At the subsequent press conference, Fed Chairman Powell made it clear that the Fed had entered the end of its interest rate hike cycle and discussions on interest rate cuts had begun. “The Fed gave the market an early Christmas gift,” said Kellie Wood, deputy director of fixed income at Schroders Plc in Sydney. At the same time, the dovish turn of the FOMC caused the U.S. dollar index to fall below the 102 mark for a time, and non-U.S. currencies rose across the board.
According to a report by CNR on December 16, Williams, the “third in command” of the Federal Reserve and President of the Federal Reserve Bank of New York, suddenly issued a hawkish tone on Friday, pouring cold water on this expectation, saying that there is currently no real discussion on cutting interest rates, and said To be prepared to tighten policy further, the Fed must be prepared to raise interest rates once more if necessary.
According to the Daily Economic News report on December 15, Wang Qing, chief macroeconomic analyst of Oriental Jincheng, told reporters that the RMB exchange rate once morest the U.S. dollar has risen rapidly in the past two trading days, mainly due to the December Federal Reserve interest rate meeting, which made it clear that interest rates will be cut in 2024. The U.S. dollar index fell sharply. In addition, the recent strengthening of the stability of Sino-US relations, the inversion of Sino-US interest rate differentials following widening for seven consecutive months, has turned to convergence since November, and the current domestic macro-economy has basically maintained a recovery momentum, etc., have also played a certain role in assisting. effect.
“In addition to changes in the trend of the US dollar, the current key to determining the strength of the RMB exchange rate is still the domestic macroeconomic trend.” Wang Qing pointed out that with the continued efforts to stabilize growth policies, the domestic macroeconomics stabilized and rebounded following the third quarter, and the internal depreciation pressure of the RMB in the early stage has been Significantly eased. This is the main reason why the US dollar continued to appreciate from August to October, while the RMB exchange rate stabilized.
Regarding the next trend of the RMB, Wang Qing said that with the end of the Fed’s interest rate hike process, especially the market sentiment is reversing, “it cannot be ruled out that the U.S. dollar index will continue to fall to the 100 mark before the end of the year.” Wang Qing pointed out that in the short term, the RMB still has certain appreciation potential once morest the US dollar, and there is the possibility of stably entering the range below 7.1, but the three major RMB basket exchange rate indexes such as CFETS, which can better reflect the true level of the RMB exchange rate, will mainly remain stable.
Wang Qing believes that in 2024, the domestic economy will further return to normal operating levels, and the internal depreciation pressure of the RMB will tend to weaken. In addition, the US dollar index is easy to fall but difficult to rise. The RMB is expected to fluctuate in both directions between 6.8 and 7.2, and the exchange rate center will be slightly lower than in 2023. The three major RMB basket exchange rate indexes including CFETS will continue to remain stable. However, until the domestic real estate industry clearly shows a recovery trend, it is unlikely that the RMB will continue to shift into an appreciation channel in 2024.
According to a report by the Securities Times on the 17th, some economists said that as the Federal Reserve stops raising interest rates and is expected to cut interest rates next year, the RMB will most likely enter an appreciation channel. In addition, continued efforts in domestic policies will also provide impetus for the stabilization of the RMB exchange rate. Zhao Wei, chief economist of China International Finance Securities, believes that the continuity of domestic policy efforts and the marginal changes in northbound funds are “new variables” that need to be paid attention to.
“The RMB exchange rate will remain stable and rise before the Spring Festival. Moreover, the RMB exchange rate will still have rebound momentum following the Spring Festival, and there may be a third peak of this trend that will start in 2022.” The Industrial Research macro team said that the smooth RMB The trend appreciation market still needs to wait for factors such as a rebound in Sino-US interest rate differentials or a return to loose domestic US dollar liquidity.
On December 16, “Nihon Keizai Shimbun” reported that the RMB is appreciating. This is because the United States has actually ended raising interest rates and the interest rate gap between the United States and China has narrowed sharply. The yield gap between the 10-year Treasury bonds (benchmark bonds) in the United States and China widened to more than 2% in October and has now narrowed sharply to around 1.2%. Investors’ enthusiasm for U.S. Treasury bond yields has weakened. For China, concerns regarding capital outflows are receding.
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Editor: Xu Jian
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