After a period of adjustment, the RMB reappeared in a breakthrough trend in October. Although the median price did not hit a new high as in the previous trading day, the spot exchange rate of the RMB against the US dollar reached 6.00 in the vicinity of 14 o'clock on the 24th, which was the highest since the exchange rate reform.
The "5th era" seems to be close at hand. In the context of weak external demand recovery, the appreciation of the renminbi has further squeezed the profit margins of exporting companies. However, industry experts said in an interview that although the appreciation will have a certain impact on exports, this does not mean that policy makers will reduce tolerance for appreciation. In the context of the deepening of the internationalization of the renminbi and the acceleration of the domestic marketization of interest rates, the marketization of the exchange rate mechanism needs to be further accelerated. Now is the time for the exchange rate to accelerate to return to the equilibrium exchange rate.
work hard
Spot exchange rate breaks through four barriers
On the 24th, the spot exchange rate of the renminbi against the US dollar hit a new high since the exchange rate reform. At around 14:00 on the same day, the spot exchange rate of RMB against the US dollar reached 6.0808.
Since August this year, the spot exchange rate of the RMB against the US dollar has remained at around 6.2. In October, the renminbi began to accelerate its appreciation. Especially since last week, the spot exchange rate of the RMB against the US dollar has shown a breakthrough trend, breaking through the 6.12, 6.11, 6.10 and 6.09 mark. Since October, the appreciation of the RMB against the US dollar has increased by more than 0.6%.
In terms of the central parity of the renminbi, the central parity of the renminbi against the US dollar has hit a record high for five consecutive times in October. Compared with the beginning of the year, the appreciation of the central parity of the RMB has reached 2.4%. Offshore renminbi also followed the same appreciation track. On October 24, the USD/RMB (Hong Kong) spot exchange rate was fixed at 6.0817, which was the fourth consecutive trading day of the week.
The latest real-time exchange rate data for the September issue of the Bank for International Settlements (BIS) also indirectly predicts these trends. The data shows that the real effective exchange rate index of the RMB in September was 117.4, an increase of 0.3 from the previous month. It briefly fell back in August and rose again and reached a record high.
The strong central parity of the renminbi is closely related to the weak dollar. Recently, the Fed’s delay in exiting QE, US debt negotiations, and under-optimistic employment data are all negative for the dollar. The data shows that the US dollar index has dropped from 84 points in July to the current 79. “The RMB exchange rate mechanism emphasizes adjustments with reference to a basket of currencies. The central parity of the RMB opening is also formed. Although the market does not know the composition of the basket currency, the US dollar index is the best coordinate for the external observation of the basket currency. Past experience also shows that the US dollar Once the index weakens, the renminbi will strengthen." International financial expert Zhao Qingming said in an interview with the Economic Information Daily.
Zhao Qingming also pointed out that the spot exchange rate hit a new high, indicating that the recent enthusiasm for the appreciation of the renminbi has come again. "In August, liquidity tensions eased, market sentiment turned, and weak devaluation expectations turned into weak appreciation expectations. In October, this expectation is even stronger." Zhao Qingming said.
In this context, the phenomenon of foreign exchange outflows in the previous period is no longer, and the pressure on foreign exchange inflows is further increased. In June and July of this year, the balance of foreign exchange holdings of financial institutions decreased by 41.2 billion yuan and 24.4 billion yuan respectively, and the outflow of funds was obvious. Since August, the foreign exchange holdings of financial institutions have ended negative growth for two consecutive months, an increase of 27.32 billion yuan. According to the latest data released by the central bank, as of the end of September, the foreign exchange balance of financial institutions in China reached 275,179.54 billion yuan, an increase of 126.362 billion yuan from the end of August. 126.362 billion yuan also set a new monthly high for the increase in foreign exchange holdings of financial institutions since May.
According to Reuters, the expected rise in the appreciation of the renminbi has triggered an uproar in the foreign exchange forward market. Enterprises and banks have sold long-term dollar positions, swap points have fallen, and successively triggered long-selling sell-offs. This tragic market situation, which is called “multiple killsâ€, has filled the market with a panic atmosphere.
influences
Appreciation and sales of export enterprises
The acceleration of the appreciation of the renminbi has also affected the nerves of China's export enterprises. Many export enterprises said in an interview with the Economic Information Daily that the recovery of external demand was not obvious this year, and the order situation of enterprises has not improved. The successive appreciation of the renminbi is undoubtedly worse for them, further squeezing the profit margin. . During the interview, many companies offered to further control the pace of appreciation of the RMB exchange rate.
A person in charge of a Zhejiang enterprise producing small household appliances told reporters that “the renminbi has risen by 2% so far this year, while the profit margins of the home appliance and electronics industries are generally around 4% to 5%, and profits have been eroded by more than half.â€
The light industry is also affected by exchange rate fluctuations. The heads of several domestic light industry enterprises have said that the recent breakthrough of the RMB exchange rate in the middle price has made the company feel heavy burden. If it reaches or even breaks the “6 yuan mark†before the end of the year, it is very It may have a devastating impact on the entire light industry. And if this appreciation is achieved before the arrival of new orders around the first quarter of next year, companies may be able to weather the difficulties relatively smoothly.
In the face of the appreciation of the renminbi, some companies have adopted a lock-in exchange rate, financial instruments to hedge, renminbi settlement, and a single bargaining. Other companies have adopted measures to increase quotations to relieve pressure, but price increases will inevitably lead to customer losses. Some SMEs with poor bargaining power can only keep their orders at the expense of profits.
Recently, a survey report on the survival status of small and medium-sized foreign trade enterprises in a survey institution shows that among the more than 1,000 small and medium-sized foreign trade enterprises in the Pearl River Delta region, 20.09% of enterprises have pushed down orders due to exchange rate fluctuations. Since 2013 The average amount of orders rejected by the company reached US$578,000. Seventy-eight percent of small and medium-sized micro-business owners believe that the appreciation of the renminbi has become one of the most important factors affecting foreign trade, especially exports.
What worries export companies is that while the renminbi continues to appreciate, the emerging markets and the currencies of Japan and South Korea are depreciating sharply. The superposition effect has greatly affected the export competitiveness of enterprises.
Bai Ming, a researcher at the Ministry of Commerce, told the Economic Information Daily that the appreciation of the renminbi has put a lot of pressure on enterprises, and the real effective exchange rate has appreciated sharply. At the same time, the currencies of emerging market countries, which are the driving force for China’s export growth, have depreciated sharply in September. The superposition effect on China's real exchange rate has intensified the difficulty of export.
"Our main competitors are Japanese cars and Korean cars. After the depreciation of the yen and the Korean won, they have more room for price cuts, which directly leads to a decline in our competitiveness. Together with the appreciation of the renminbi, our prices are somewhat Upgraded, in this case, the competitive pressure this year is greater than last year." Zhang Wei, senior manager of the marketing department of the marketing department of Great Wall Motor Co., Ltd. told reporters.
According to customs data, after a two-month rise, China’s exports unexpectedly fell by 0.3% in September. According to industry analysts, the unfavorable international monetary environment is one of the main reasons for the unexpectedly lower year-on-year decline in exports in September. The drag of strong RMB on exports is worthy of attention.
UBS's research report released on the 23rd also said that the appreciation of the renminbi may limit China's export recovery, and the rise in export prices will have a significant negative impact on actual export demand.
Outlook
The local currency should accelerate the return to the equilibrium exchange rate
The spot exchange rate of the RMB is getting closer to the key psychological point of “6â€. At this point, the future trend of the RMB has caused the market to pay more attention.
Since the exchange reform in July 2005, although the period has experienced a temporary depreciation, the appreciation trend of the RMB against the US dollar has remained unchanged, and it has exceeded 35% so far. “The RMB exchange reform has been 8 years since then. Compared with 2005, the exchange rate is definitely getting closer to the equilibrium level. However, it is difficult to judge the equilibrium exchange rate. The exchange rate is a bilateral issue, for example, the RMB exchange rate against the US dollar. It depends on the situation of the United States and China. It is impossible to judge whether it is equilibrium or imbalance, depending on how much the yuan itself has risen." Zhao Qingming said. He also pointed out that from the perspective of China's own balance of payments, the double surplus pattern of current account and capital and financial projects has not changed, indicating that the renminbi is still undervalued and there is room for further return to the equilibrium exchange rate. He believes that from the perspective of the central parity of the renminbi, the appreciation of the renminbi during the year is likely to be between 3% and 5%.
ANZ’s latest report pointed out that under the influence of capital inflows and delayed withdrawal of QE, the RMB will face upward pressure in the short term, but the central bank may frequently intervene in the spot market to avoid excessive appreciation of the RMB. “We also believe that once the RMB The spot exchange rate broke through 6.08, and the central bank may introduce a large-scale intervention," ANZ reported. In fact, the central parity of the renminbi did not hit a new high on the 24th, and some market participants have interpreted that the central bank has intentionally “controlledâ€.
However, Zhao Qingming said that although the appreciation will have a certain impact on exports, this does not mean that policy makers will therefore have less tolerance for appreciation. He said that in the context of the deepening of the internationalization of the renminbi and the acceleration of the domestic marketization of interest rates, the marketization of the exchange rate mechanism needs to be further accelerated. "There is now a need for the exchange rate to accelerate to the equilibrium exchange rate." Liu Weiming, an expert on international financial markets at CITIC Bank's head office, also told the Economic Information Daily that the long-term weakening of the US dollar gave the renminbi a further appreciation. The RMB exchange rate may reach the range of 5.8 to 6. "It is not that this interval is the equilibrium interval. After reaching this interval, the RMB may depreciate back to the range above 6. However, when approaching the equilibrium interval, rapid appreciation is not a bad thing, and slow appreciation is not a good thing. The logic is that when it reaches the limit, it will automatically return quickly, otherwise it will not turn around."
The "5th era" seems to be close at hand. In the context of weak external demand recovery, the appreciation of the renminbi has further squeezed the profit margins of exporting companies. However, industry experts said in an interview that although the appreciation will have a certain impact on exports, this does not mean that policy makers will reduce tolerance for appreciation. In the context of the deepening of the internationalization of the renminbi and the acceleration of the domestic marketization of interest rates, the marketization of the exchange rate mechanism needs to be further accelerated. Now is the time for the exchange rate to accelerate to return to the equilibrium exchange rate.
work hard
Spot exchange rate breaks through four barriers
On the 24th, the spot exchange rate of the renminbi against the US dollar hit a new high since the exchange rate reform. At around 14:00 on the same day, the spot exchange rate of RMB against the US dollar reached 6.0808.
Since August this year, the spot exchange rate of the RMB against the US dollar has remained at around 6.2. In October, the renminbi began to accelerate its appreciation. Especially since last week, the spot exchange rate of the RMB against the US dollar has shown a breakthrough trend, breaking through the 6.12, 6.11, 6.10 and 6.09 mark. Since October, the appreciation of the RMB against the US dollar has increased by more than 0.6%.
In terms of the central parity of the renminbi, the central parity of the renminbi against the US dollar has hit a record high for five consecutive times in October. Compared with the beginning of the year, the appreciation of the central parity of the RMB has reached 2.4%. Offshore renminbi also followed the same appreciation track. On October 24, the USD/RMB (Hong Kong) spot exchange rate was fixed at 6.0817, which was the fourth consecutive trading day of the week.
The latest real-time exchange rate data for the September issue of the Bank for International Settlements (BIS) also indirectly predicts these trends. The data shows that the real effective exchange rate index of the RMB in September was 117.4, an increase of 0.3 from the previous month. It briefly fell back in August and rose again and reached a record high.
The strong central parity of the renminbi is closely related to the weak dollar. Recently, the Fed’s delay in exiting QE, US debt negotiations, and under-optimistic employment data are all negative for the dollar. The data shows that the US dollar index has dropped from 84 points in July to the current 79. “The RMB exchange rate mechanism emphasizes adjustments with reference to a basket of currencies. The central parity of the RMB opening is also formed. Although the market does not know the composition of the basket currency, the US dollar index is the best coordinate for the external observation of the basket currency. Past experience also shows that the US dollar Once the index weakens, the renminbi will strengthen." International financial expert Zhao Qingming said in an interview with the Economic Information Daily.
Zhao Qingming also pointed out that the spot exchange rate hit a new high, indicating that the recent enthusiasm for the appreciation of the renminbi has come again. "In August, liquidity tensions eased, market sentiment turned, and weak devaluation expectations turned into weak appreciation expectations. In October, this expectation is even stronger." Zhao Qingming said.
In this context, the phenomenon of foreign exchange outflows in the previous period is no longer, and the pressure on foreign exchange inflows is further increased. In June and July of this year, the balance of foreign exchange holdings of financial institutions decreased by 41.2 billion yuan and 24.4 billion yuan respectively, and the outflow of funds was obvious. Since August, the foreign exchange holdings of financial institutions have ended negative growth for two consecutive months, an increase of 27.32 billion yuan. According to the latest data released by the central bank, as of the end of September, the foreign exchange balance of financial institutions in China reached 275,179.54 billion yuan, an increase of 126.362 billion yuan from the end of August. 126.362 billion yuan also set a new monthly high for the increase in foreign exchange holdings of financial institutions since May.
According to Reuters, the expected rise in the appreciation of the renminbi has triggered an uproar in the foreign exchange forward market. Enterprises and banks have sold long-term dollar positions, swap points have fallen, and successively triggered long-selling sell-offs. This tragic market situation, which is called “multiple killsâ€, has filled the market with a panic atmosphere.
influences
Appreciation and sales of export enterprises
The acceleration of the appreciation of the renminbi has also affected the nerves of China's export enterprises. Many export enterprises said in an interview with the Economic Information Daily that the recovery of external demand was not obvious this year, and the order situation of enterprises has not improved. The successive appreciation of the renminbi is undoubtedly worse for them, further squeezing the profit margin. . During the interview, many companies offered to further control the pace of appreciation of the RMB exchange rate.
A person in charge of a Zhejiang enterprise producing small household appliances told reporters that “the renminbi has risen by 2% so far this year, while the profit margins of the home appliance and electronics industries are generally around 4% to 5%, and profits have been eroded by more than half.â€
The light industry is also affected by exchange rate fluctuations. The heads of several domestic light industry enterprises have said that the recent breakthrough of the RMB exchange rate in the middle price has made the company feel heavy burden. If it reaches or even breaks the “6 yuan mark†before the end of the year, it is very It may have a devastating impact on the entire light industry. And if this appreciation is achieved before the arrival of new orders around the first quarter of next year, companies may be able to weather the difficulties relatively smoothly.
In the face of the appreciation of the renminbi, some companies have adopted a lock-in exchange rate, financial instruments to hedge, renminbi settlement, and a single bargaining. Other companies have adopted measures to increase quotations to relieve pressure, but price increases will inevitably lead to customer losses. Some SMEs with poor bargaining power can only keep their orders at the expense of profits.
Recently, a survey report on the survival status of small and medium-sized foreign trade enterprises in a survey institution shows that among the more than 1,000 small and medium-sized foreign trade enterprises in the Pearl River Delta region, 20.09% of enterprises have pushed down orders due to exchange rate fluctuations. Since 2013 The average amount of orders rejected by the company reached US$578,000. Seventy-eight percent of small and medium-sized micro-business owners believe that the appreciation of the renminbi has become one of the most important factors affecting foreign trade, especially exports.
What worries export companies is that while the renminbi continues to appreciate, the emerging markets and the currencies of Japan and South Korea are depreciating sharply. The superposition effect has greatly affected the export competitiveness of enterprises.
Bai Ming, a researcher at the Ministry of Commerce, told the Economic Information Daily that the appreciation of the renminbi has put a lot of pressure on enterprises, and the real effective exchange rate has appreciated sharply. At the same time, the currencies of emerging market countries, which are the driving force for China’s export growth, have depreciated sharply in September. The superposition effect on China's real exchange rate has intensified the difficulty of export.
"Our main competitors are Japanese cars and Korean cars. After the depreciation of the yen and the Korean won, they have more room for price cuts, which directly leads to a decline in our competitiveness. Together with the appreciation of the renminbi, our prices are somewhat Upgraded, in this case, the competitive pressure this year is greater than last year." Zhang Wei, senior manager of the marketing department of the marketing department of Great Wall Motor Co., Ltd. told reporters.
According to customs data, after a two-month rise, China’s exports unexpectedly fell by 0.3% in September. According to industry analysts, the unfavorable international monetary environment is one of the main reasons for the unexpectedly lower year-on-year decline in exports in September. The drag of strong RMB on exports is worthy of attention.
UBS's research report released on the 23rd also said that the appreciation of the renminbi may limit China's export recovery, and the rise in export prices will have a significant negative impact on actual export demand.
Outlook
The local currency should accelerate the return to the equilibrium exchange rate
The spot exchange rate of the RMB is getting closer to the key psychological point of “6â€. At this point, the future trend of the RMB has caused the market to pay more attention.
Since the exchange reform in July 2005, although the period has experienced a temporary depreciation, the appreciation trend of the RMB against the US dollar has remained unchanged, and it has exceeded 35% so far. “The RMB exchange reform has been 8 years since then. Compared with 2005, the exchange rate is definitely getting closer to the equilibrium level. However, it is difficult to judge the equilibrium exchange rate. The exchange rate is a bilateral issue, for example, the RMB exchange rate against the US dollar. It depends on the situation of the United States and China. It is impossible to judge whether it is equilibrium or imbalance, depending on how much the yuan itself has risen." Zhao Qingming said. He also pointed out that from the perspective of China's own balance of payments, the double surplus pattern of current account and capital and financial projects has not changed, indicating that the renminbi is still undervalued and there is room for further return to the equilibrium exchange rate. He believes that from the perspective of the central parity of the renminbi, the appreciation of the renminbi during the year is likely to be between 3% and 5%.
ANZ’s latest report pointed out that under the influence of capital inflows and delayed withdrawal of QE, the RMB will face upward pressure in the short term, but the central bank may frequently intervene in the spot market to avoid excessive appreciation of the RMB. “We also believe that once the RMB The spot exchange rate broke through 6.08, and the central bank may introduce a large-scale intervention," ANZ reported. In fact, the central parity of the renminbi did not hit a new high on the 24th, and some market participants have interpreted that the central bank has intentionally “controlledâ€.
However, Zhao Qingming said that although the appreciation will have a certain impact on exports, this does not mean that policy makers will therefore have less tolerance for appreciation. He said that in the context of the deepening of the internationalization of the renminbi and the acceleration of the domestic marketization of interest rates, the marketization of the exchange rate mechanism needs to be further accelerated. "There is now a need for the exchange rate to accelerate to the equilibrium exchange rate." Liu Weiming, an expert on international financial markets at CITIC Bank's head office, also told the Economic Information Daily that the long-term weakening of the US dollar gave the renminbi a further appreciation. The RMB exchange rate may reach the range of 5.8 to 6. "It is not that this interval is the equilibrium interval. After reaching this interval, the RMB may depreciate back to the range above 6. However, when approaching the equilibrium interval, rapid appreciation is not a bad thing, and slow appreciation is not a good thing. The logic is that when it reaches the limit, it will automatically return quickly, otherwise it will not turn around."
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