2023-07-04 03:19:12
This morning, big news came from the outside world!
According to sources, a number of refineries in India have begun to use RMB to purchase crude oil imported from Russia. Previously, talks between India and Russia on the settlement issue collapsed. This morning, the renminbi also turned upwards, once rising above the 7.24 mark. So, will the momentum of RMB depreciation be reversed?
In fact, there is another big variable for the renminbi, and that is U.S. Treasury Secretary Yellen. China’s Ministry of Finance confirmed yesterday that Yellen will visit China from July 6 to 9. According to a Archyde.com report on Tuesday (July 4), a statement issued by the U.S. Treasury Department showed that U.S. Treasury Secretary Yellen had a “frank and productive” dialogue with Chinese Ambassador to the United States Xie Feng before her visit to China.
So why do you say that Yellen will be a major variable in the RMB exchange rate? This has a lot to do with the current difficulties facing the US economy.
India makes a move, and the renminbi makes another effort
In the last three trading days, the RMB exchange rate has undergone significant changes. Since June 15, USD/CNH has fallen below the upward trend line for the first time, the top divergence has appeared for the first time, and three small negative lines have appeared for the first time in the past two months.
Judging from the news, there is another big news today. According to Archyde.com on Monday (July 3), citing three sources, Indian Oil Corporation is India’s largest buyer of Russian crude oil. refineries; at least two of India’s three private refiners are also using yuan to pay for some Russian imports, two of the sources said.
According to the sources, IOC settled the transaction with the Russian oil company (Rosneft) by paying RMB to the Bank of China through ICICI Bank. Since June, Indian Oil Corporation has used the same method to settle other cargoes of Rosneft in RMB. It was not possible to determine how many barrels of Russian crude were purchased by Indian refiners using Chinese yuan. But since June, Indian Oil Corporation has used yuan to settle multiple batches of goods imported from Russia.
An Indian government source said that the preferred currency for Indian refiners to settle such trades is usually the US dollar, but if the seller has a special request or the bank does not want to settle the trade in US dollars, the refinery sometimes chooses other currencies, such as Di. Rham and RMB.
In addition to India, Pakistani Oil Minister Malik also confirmed last month that the first batch of 100,000 tons of Russian discounted crude oil purchased by Pakistan was also settled in RMB.
So, will the depreciation trend of the renminbi be reversed? There may be another variable.
Yellen meets with Xie Feng
U.S. Treasury Secretary Yellen will visit China from July 6 to 9. Prior to this, according to a Archyde.com report on Tuesday (July 4), a statement issued by the US Treasury Department showed that Yellen had a “frank and fruitful” conversation with Xie Feng, the Chinese ambassador to the United States, before her visit to China. . Both sides expressed support for ongoing efforts to keep lines of communication open and to manage the bilateral relationship responsibly, in line with Yellen’s upcoming visit to Beijing.
The statement from the Treasury Department also said that Yellen raised issues of concern during the dialogue between the two parties and also expressed the importance of cooperation between the two largest economies on global challenges, including macroeconomic and financial issues.
It is reported that Yellen will do three things during this trip:
One is to hold high-level economic talks with Chinese counterparts to discuss global challenges and issues of common concern;
The second is to meet with relevant persons of American companies doing business in China;
The third is to re-emphasize the attitude of not supporting “decoupling” and to justify the fact that the United States is carrying out “decoupling”.
Judging from Washington’s recent performance, its tough stance on China has not shown signs of loosening. Yellen also proposed “three basic principles” for China: seeking to ensure the national security interests of the United States and its allies; A healthy economic relationship that expands economic opportunity for American workers and businesses; and seeks to cooperate with China on pressing global challenges such as climate change and debt distress.
Therefore, although Yellen’s visit is unlikely to completely reverse Sino-US relations, with the resumption of Sino-US contacts, the two countries may make progress in some small areas and deepen understanding and exchange views through contacts.
So, why do you say that Yellen’s trip will be the biggest variable for the RMB?
In fact, we can recall the performance of the United States and its Ministry of Finance during the depreciation of the renminbi in the past few years. In the early years, as long as the renminbi depreciated sharply, the United States would definitely threaten to list China as a “currency manipulator”. And since last year, the depreciation of the renminbi has gradually expanded, but we have not heard such a voice, which is determined by the economic situation in the United States. At present, the inflation level in the United States is still high, and they still need cheap goods from China to stabilize their prices. In this case, a relatively low RMB exchange rate is beneficial to it. Therefore, they will not talk regarding the RMB exchange rate at this time, but are happy to see the depreciation. It can be expected that there is a high probability that Yellen’s trip will also involve macroeconomic issues such as tariffs, exchange rates, and debt.
(Source of article: Brokerage China)
Article source: Brokerage China
Author of the article: Shi Qian
Original title: Big news suddenly! India finally made a move, and the RMB made three “firsts”! Yellen meets Xie Feng, is she the big change?
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