Source: China Securities News
China Securities Network News (reporter Zhao Bai Zhinan) China Securities News reporter interviewed Guan Tao, global chief economist of BOC Securities, on October 27 on the recent trend of the RMB exchange rate. Guan Tao said that factors such as the correction of the US dollar are the main reasons for the short-term appreciation of the RMB exchange rate. In the next step, the trend of the RMB exchange rate will continue to depend on market supply and demand, domestic economic fundamentals and changes in the international financial market, which may appreciate or depreciate, and it is inevitable that the exchange rate will not be accurate, and it will continue to be the norm with ups and downs and two-way fluctuations.
Guan Tao believes that the main reason for the appreciation of the RMB exchange rate since October is the high correction of the US dollar index. Previously, the Fed's monetary policy tightening expectations pushed up the dollar exchange rate, and the dollar index center rose above 94 at one point. With the expectation of monetary policy adjustment gradually digested, the recent rise in the dollar index is weak and has been adjusted. Through the pricing mechanism of the RMB exchange rate, the US dollar exchange rate has a reverse guiding effect on the RMB exchange rate, that is, the lower dollar index will promote the RMB exchange rate against the US dollar to a certain extent. Second, there were some adjustments in China's economic data in the third quarter, and the short-term profits in the market were exhausted after the release of the data. In fact, China's economic correction in the third quarter is not an isolated phenomenon, and the global economy has experienced a correction. After October 19, the northbound funds adjusted their trading strategy and resumed net inflows. Third, China's exports continued to perform well, the surplus remained at a high level, and market supply and demand also drove the appreciation of the RMB exchange rate, which also reflected the better fundamentals of the domestic economy.
"Overall, the RMB exchange rate has maintained normal two-way fluctuations." Guan Tao said that since the beginning of this year, the RMB exchange rate has risen and fallen, and on the whole, it has remained basically stable. Among major currencies, the stability of the RMB exchange rate is also relatively strong.
From a medium- to long-term perspective, Guan Tao believes that the RMB exchange rate is affected by a variety of factors at home and abroad, including changes in the international financial market, domestic economic fundamentals, market supply and demand, and sentiment. In the international financial market, as the Fed begins to reduce the bond-buying process, the market's expectations for the Fed's interest rate hike next year are also rising, which may trigger the return of funds to the United States and re-push up the US dollar exchange rate, which may cause some pressure on emerging market currencies, including the renminbi. In terms of supply and demand, the global supply chain tension is gradually eased, China's orders may be diverted again; the international economy is struggling to recover, overseas demand may also weaken, and there are some uncertainties in the high growth of China's exports, which will have a certain impact on supply and demand.
"Two-way fluctuations in the RMB exchange rate will remain the norm for some time to come." Guan Tao said.
![Guan Tao, global chief economist of BOC Securities: At present, there will be neither policy decline nor policy increase[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)