RMB breaks 7.28! The central bank's supervisory media released a statement, just now the sentiment | RMB | Central Bank
Just now, the offshore Chinese yuan fell below 7.28 against the US dollar, falling more than 100 points within the day.
The Financial Times, supervised by the central bank, published an article today stating that we should approach the fluctuation of the RMB exchange rate rationally!
According to the Financial Times, industry experts believe that the changes in interest rate spreads caused by the divergence of monetary policies between China and the United States, as well as the phased strengthening of the US dollar exchange rate, have brought short-term and phased pressure to the RMB exchange rate. However, with the steady recovery of the domestic economy and the resilience of foreign trade, the RMB assets have long-term attractiveness, and the stability of the RMB exchange rate is supported by solid fundamentals. In the second half of the year, the RMB exchange rate is expected to continue to maintain basic stability at a reasonable equilibrium level.
Industry experts believe that the changes in interest rate spreads caused by the divergence of monetary policies between China and the United States, as well as the phased strengthening of the US dollar exchange rate, have brought short-term and phased pressure to the RMB exchange rate. However, with the steady recovery of the domestic economy and the resilience of foreign trade, the RMB assets have long-term attractiveness, and the stability of the RMB exchange rate is supported by solid fundamentals. In the second half of the year, the RMB exchange rate is expected to continue to maintain basic stability at a reasonable equilibrium level.
Wu Dan, a researcher at the Bank of China Research Institute, stated that it is crucial for enterprises to establish a risk neutral concept in the context of normalized two-way fluctuations in the RMB exchange rate. Don't bet on the appreciation or depreciation of the Chinese yuan, remember to bet for a long time before losing. Wu Dan believes that under the bidirectional fluctuation of exchange rates, enterprises and individuals should maintain reasonable expectations of the market and choose the optimal exchange timing. Foreign trade enterprises should actively seek consulting solutions from professional financial institutions, use financial derivatives such as forward foreign exchange settlement and foreign exchange options to reduce transaction risks, better manage domestic and foreign assets, and maintain stable returns.
In addition, Minsheng Securities issued a statement stating that short-term pessimism has been vented, seasonal demand for foreign exchange purchases has increased, and there are signs of currency depreciation exceeding the adjustment limit.
Analysis shows that the reason for depreciation is that the factors that led to the depreciation of the RMB in the early stage have not improved: firstly, policy expectations have fallen through, and market pessimism has not reversed. The expected stable growth policy has repeatedly fallen below market expectations, and the pessimistic sentiment on economic fundamentals is still ongoing. In addition, geopolitical factors such as the Russia-Ukraine conflict also disturbed market sentiment, and the RMB exchange rate came under pressure again in June. Secondly, June is the peak season for corporate foreign exchange dividend demand, and it is not ruled out that the exchange rate may experience short-term overshoot. Concentrated foreign exchange purchases by enterprises in a short period of time can easily form a feedback mechanism of "foreign exchange purchase depreciation", accelerate the weakening of the RMB exchange rate, and even push the exchange rate to a level that deviates significantly from economic fundamentals.
The good news is that there is currently no consensus expectation of depreciation in the foreign exchange market. Is the current RMB exchange rate still in a sustained and intense depreciation channel? This is currently a market concern. The primary condition for any sustained and intense depreciation is for the market to form a consistent expectation of the depreciation of the RMB exchange rate. However, the reality is that there is no strong expectation of depreciation in the current exchange rate market, which is significantly different from 2022. This year, the Chinese yuan has continued to depreciate, but the implied volatility of USDCNH options is still not high. Currently, there is no large number of USDCNH option positions that are expected to further depreciate, but rather a large number of positions that are expected to rebound in the future. There is no significant panic among market participants about the depreciation of the Chinese yuan.
Minsheng Securities stated that 7.3 may become a key point in the market game, and it is expected that the central bank may stabilize market expectations. The RMB is currently approaching the 7.3 level, which will also become a key point in the market's psychological expectation game. In the short term, new exchange rate management tools may be introduced, and foreign exchange liquidity adjustment tools may be the first choice. The current countercyclical adjustment factor of the central bank has significantly increased its impact on the middle price, and the deviation between the middle price and market consensus expectations has reached a new high since November last year. The current situation of the RMB exchange rate has attracted the attention of the central bank, and it is necessary for the central bank to activate management tools. We believe that the best way to alleviate the pressure of depreciation is to use foreign exchange liquidity adjustment tools to maintain stable exchange rate trends in the short term.
The People's Bank of China has increased its loan and rediscount quota for agriculture and small businesses by 200 billion yuan
On the afternoon of the 30th, the People's Bank of China announced that in order to implement the spirit of the State Council Executive Meeting on June 16th and promote sustained economic recovery, the People's Bank of China has decided to increase the amount of re loans and rediscounts for agriculture and small businesses by 200 billion yuan, further increase financial support for agriculture, rural areas, small and micro enterprises, and private enterprises, play a precise drip irrigation role, reduce social financing costs, promote employment expansion, and support the recovery of endogenous economic power. Among them, the amount of agricultural re loans, small and medium-sized re loans, and rediscounting increased by 40 billion yuan, 120 billion yuan, and 40 billion yuan respectively. After adjustment, the amount was 800 billion yuan, 1760 billion yuan, and 740 billion yuan, respectively.
In recent years, the People's Bank of China has fully utilized the dual functions of both the total amount and structure of structural monetary policy tools, increased support for agriculture, small businesses, re loans, and rediscounting, effectively supported agriculture, rural areas, small and micro enterprises, and private enterprises, and served the construction of a long-term mechanism for inclusive finance. As of the end of the first quarter of 2023, the balance of re loans and rediscounts for supporting agriculture and small businesses in China reached a historic high of 2.6 trillion yuan.
