The exchange rate fell back to 1 US dollar to 6.9075 yuan after the central price of the renminbi was raised


2023-03-31 17:24

On Tuesday (November 6), the yuan traded at 6.9075 against the dollar, down 99 basis points from the previous session. The yuan traded at 6.8976 against the dollar in the previous session. The onshore yuan closed at 6.9265 against the dollar at 16:30 on Monday, down 368 basis points from the previous session. At 23:30, the night closed at 6.9260 yuan. Full-day volume increased by $550 million to $30.022 billion.

Analysts pointed out that after a short-term rapid rally, the RMB exchange rate fell again. However, the impact of the sharp rebound in the RMB exchange rate on market sentiment and expectations should not be underestimated, and the RMB exchange rate against the US dollar may fluctuate in both directions in the short term or follow the US dollar index.

In the second half of last week, the yuan launched a major counteroffensive against the dollar as the dollar index pulled back, and the offshore yuan rebounded from the lowest 6.98 yuan line to the highest 6.85 line, spanning thousands of points.

Although from the perspective of economic and policy cycles, the convergence of the growth difference between China and the United States economy and the divergence of the monetary policy cycle determine that there is still a certain downward pressure on the exchange rate of the RMB against the US dollar, coupled with the relatively strong US dollar index, it takes a time process to reverse the trend of the exchange rate of the RMB against the US dollar. It's hard to say that this one rebound will turn things around.

However, the impact of this "episode" on market sentiment and expectations should not be overlooked. Monita said in the latest research report that "the recent sharp rise in the RMB exchange rate may be mainly a lesson and warning to bears." After this exchange with the bears, it will further weaken the short-selling power of the yuan. ”

Institutional analysis said that with the continuous sharp rise of the RMB exchange rate in the second half of last week, market expectations are showing positive changes, on the one hand, the regulator frequently expressed its position to maintain the stable exchange rate, and had confidence and rich policy tools to maintain the stability of the RMB market; On the other hand, the steady growth policy is still being intensively introduced, the wide credit is on the way, the financing of private enterprises can be expected, the cumulative effect of a series of policies is emerging, and the improvement of economic expectations constitutes a solid fundamental support for the stabilization of the RMB.

It is worth mentioning that the most expensive midterm elections in the history of the United States will enter the final voting stage on Tuesday local time. For Wall Street, the next 24 hours could be the most thrilling time at the end of the year. The midterm elections are widely seen as a referendum on Trump's presidential performance, with party strategists expecting the Senate and House of Representatives to be controlled by different parties, polls predicting that Democrats are expected to win a majority of seats in the House of Representatives, while Republicans will continue to control the Senate.

Analysts expect the midterm elections could halt the dollar's biggest rally in nearly two years, as the U.S. Congress is dominated by different parties or shows political uncertainty, reducing the chances of a new stimulus passing. Alec Phillips, chief U.S. political economist at Goldman Sachs, said in an interview that if Congress splits, U.S. Treasury yields and the dollar risk a slight decline.

Further reading:
  Assistant Minister of Commerce: There is still a lot of room for development of RMB cross-border settlement, "Sharing New Opportunities and Seeking New Development - RMB Boosts Cross-border Trade and Investment Facilitation" theme forum was held during the first China International Import Expo on the 6th, Li Chenggang, Assistant Minister of Commerce, pointed out in his speech that compared with the scale of China's trade and investment, the proportion of RMB in cross-border settlement still has a lot of room for development.

He said that this year marks the 40th anniversary of reform and opening up, and the practice over the past 40 years has fully demonstrated that reform and opening up is a key move to determine the fate of contemporary China, and it is also the source of power for China to contribute to world development (0.00 + 0.00%, diagnosis stock). The internationalization of RMB is one of the important contents of reform and opening up. At present, the international environment is undergoing profound changes, unilateralism and protectionism are on the rise, anti-globalization thinking is growing, and the risk of trade friction is intensifying. Under the current situation, discussing how the RMB can play a more active role in opening up to the outside world is undoubtedly of practical and far-reaching significance.

Li Chenggang pointed out that over the past decade, China's economy and society have developed rapidly, and China has become the world's second largest economy and the largest trading country, ranking among the top three in the world in terms of the scale of foreign capital and the second largest in the world in terms of foreign investment. The scale of RMB in cross-border trade and investment settlement has also gradually expanded, and more and more countries and regions recognize and accept RMB. In 2016, the IMF included the renminbi in the SDR basket, and the renminbi has grown to become the world's fifth-largest payment currency, third-largest trade finance currency and fifth-largest foreign exchange currency. It can be said that the internationalization of RMB is a natural choice for market players and an inevitable result of China's opening up.

However, he also said that compared with the scale of China's trade and investment, the proportion of RMB in cross-border settlement is not high, and there is still a lot of room for development, and the RMB should play a more active role in serving the development of the real economy and promoting trade and investment facilitation. At present, China is focusing on the "Belt and Road" initiative, promoting the formation of a new pattern of comprehensive opening up, and continuing to increase the use of RMB in cross-border trade and investment, which is conducive to enterprises reducing costs, preventing exchange rate risks, achieving a higher level of trade and investment liberalization and facilitation, and promoting the common development of China's economy and the world economy.

In the next step, the Ministry of Commerce will strengthen communication and exchanges with relevant departments, "on the basis of further improving the construction of RMB financial infrastructure, support enterprises to facilitate the use of RMB in cross-border trade and investment, promote the formation of a new pattern of China's opening up to the outside world, and build an open world economy." He said.

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