SMM News: in recent days, the RMB has fallen continuously, in response to the Xinhua News Agency in charge of the "Economic Information Daily" issued front page comments pointed out that the RMB exchange rate does not have the basis for a substantial devaluation. Many factors, such as economic fundamentals, the relationship between supply and demand in the foreign exchange market, and the attitude of the monetary authorities in stabilizing the exchange rate, will support the RMB exchange rate to remain basically stable at a reasonable and balanced level.
On Wednesday morning, the yuan fell 248 points to 6.8649 against the dollar, its lowest level since the end of last year. On the market side, the onshore RMB fell below 6.88 on May 14, and the offshore RMB fell below the 6.91 mark. The offshore renminbi (CNH) was trading at 6.9047 yuan against the dollar at 04:59 Beijing time this morning, down 7 points from late Monday in New York, after trading in an overall intraday trading range of 6.9176 to 6.8940 yuan.
In the face of the recent decline in the renminbi, the Economic reference newspaper published an article saying:
First of all, from the perspective of economic fundamentals, China's economic operation remained in a reasonable range in April, continuing the overall steady and steady development trend. From January to April, the total retail sales of consumer goods in China increased by 8.0% compared with the same period last year; the added value of industries above the national scale increased by 6.2% over the same period last year; and national fixed asset investment increased by 6.1% compared with the same period last year.
Secondly, judging from the relationship between supply and demand in the foreign exchange market, the deficit in the settlement and sale of foreign exchange by banks has narrowed significantly since the beginning of this year. According to data released by the State Administration of Foreign Exchange a few days ago, in the first quarter, banks had a foreign exchange settlement and sales deficit of $9.1 billion in dollar terms, down 50 per cent from a year earlier and 74 per cent per month from the second half of 2018.
Third, the monetary authorities have the foundation and ability to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level and avoid exchange rate overshoot in the short term.
Prior to the release of the article in the Economic Information Daily, the Financial Times, the competent media of the central bank, published an article entitled "there will be no sustained and substantial devaluation of the RMB exchange rate." regulators had repeatedly stressed that there would be no competitive devaluation. The RMB exchange rate will not be used as a tool to deal with external disturbances such as trade disputes.
Han Huishi, a foreign exchange expert, said: "the RMB exchange rate has fluctuated sharply over the past few years. Although China's foreign exchange reserves have fallen by US $1 trillion, they have also gained a lot of valuable experience. One of them is that in the environment of weak global market expansion and increasingly fierce international game, the role of exchange rate depreciation in stimulating exports is not significant, but the negative impact on public confidence is very strong. "
Hanhui believes that the more complex the international environment, the more need to ensure the stability of market confidence. In the face of sudden fluctuations in market sentiment and the absence of a serious imbalance between cross-border capital flows and the overall balance of payments, a more prudent strategic choice is to strengthen the monitoring of capital flows. We will continue to maintain strict management of cross-border capital flows.