Will the RMB break 7? Just now, the deputy governor of the central bank gave a reassurance!-Shanghai Metals Market

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Will the RMB break 7? Just now, the deputy governor of the central bank gave a reassurance!

Translation 07:56:30AM May 20, 2019 Source:China Securities Journal

SMM News: two weeks in a row devaluation of more than 1%, off-shore, onshore RMB against the US dollar spot exchange rate has been lost 6.9 yuan, 7 yuan integer gate exposed again.

Since the "8 / 11 exchange rate reform", the RMB exchange rate has experienced several ups and downs but has never "broken 7". Will the $7 checkpoint be safe this time?

On 19 May, Pan Gongsheng, deputy governor of the people's Bank of China and director of the State Administration of Foreign Exchange, said in an interview with the media: "We fully have the foundation, confidence and ability to maintain the stable operation of China's foreign exchange market. We will maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. "

It is worth mentioning that on May 15, the central bank successfully issued two batches of central bank bills totaling 20 billion yuan in Hong Kong.

Offshore central bank votes + officials shouted that the central bank had stepped in. RMB short, take it!

The 7 yuan pass is just around the corner.

On May 17, the offshore renminbi closed at an all-day low of 6.9486 yuan against the US dollar, while the onshore renminbi closed at 6.9138 yuan against the US dollar, the lowest in intraday trading at 6.9188 yuan, both falling to their lowest level since early December 2018.

Offshore and onshore renminbi have been lost 6.9 yuan, and according to the current rate of devaluation, the 7 yuan barrier will soon face a test.

Statistics show that this week, the offshore renminbi depreciated by 1036 points, by 1.51%, and depreciated by more than 1.5% for the second week in a row. The onshore renminbi depreciated by 1020 points, 1.5 per cent and more than 1 per cent for two weeks in a row.

The devaluation of the renminbi against the dollar began in late April. Over a period of four weeks, the RMB exchange rate wiped out all the gains of the previous few months.

The RMB exchange rate has depreciated rapidly against the US dollar since April

This situation is quite similar to the round of RMB depreciation from June to August 2018, mainly because the deterioration of the external environment has a greater impact on market psychological expectations.

It is not difficult to find that the devaluation of the RMB market exchange rate is much faster than the midpoint, indicating that the devaluation of the exchange rate is mainly dominated by market forces.

The deterioration of the external environment has obviously impacted market expectations, and the real impact on China's economic growth prospects and trade surplus is difficult to measure and needs to be further observed. It is reasonable for the main body of the market to take a cautious approach for the time being, and the RMB exchange rate may continue to weaken or even overshoot due to the influence of market sentiment.

The strength of the dollar index has also contributed to the appreciation of the dollar against the renminbi. Analysts said that the current overseas major economies in the "strong United States, strong European weak" pattern is still the same, the performance of the dollar index is much stronger than many institutions expected at the beginning of the year. The US dollar index continues the operating pattern of strong volatility, causing certain pressure on the stability of the RMB exchange rate.

Since the "8 / 11 exchange rate reform", the RMB exchange rate has experienced several ups and downs, but it has never "broken 7". Will this round of RMB break 7?

The probability is still small, the reason lies in Pan Gongsheng's answer to the reporter's question.

First, the steady operation of economy and finance provides a strong fundamental support for the RMB exchange rate.

Strong fundamental support is the basis for maintaining the overall stability of the RMB exchange rate.

Pan Gongsheng said: the steady operation of China's economy and finance has provided strong fundamental support for maintaining a reasonable and stable foreign exchange market and RMB exchange rate. Since the beginning of this year, China's foreign exchange market has been operating smoothly, foreign capital inflows have increased, foreign exchange reserves have risen steadily, and the foreign exchange market is expected to be stable as a whole.

The rise of internal and external risk factors in the short term has an impact on market sentiment. This effect may be difficult to eliminate quickly, but it is not enough to be a trend factor in the trend of the RMB exchange rate, which ultimately depends on fundamentals.

The economy has had a better-than-expected start to the year. At present, there has been no obvious change in the fundamentals of the economy, tax reduction and fee reduction and the "wide credit" policy to support the real economy have gradually taken effect, and the resilience of domestic economic growth is obvious. In the long run, China's development is still in a period of important strategic opportunities, with sufficient resilience, great potential, and continuous burst of innovative vitality, and the long-term trend of economic improvement has not and will not change. Economic fundamentals will continue to form an effective support for the RMB exchange rate, there is no basis for a significant devaluation of the RMB exchange rate.

Even compared with the second half of 2018, the current RMB exchange rate is still in a better environment, when domestic economic growth was affected by both the local credit crunch and the deterioration of the external environment, downward pressure was greater, and market expectations were more cautious.

Second, we will further promote the two-way opening of the financial market.

Foreign capital inflows also play a positive role in maintaining the overall stability of the RMB exchange rate.

Pan Gongsheng stressed: in accordance with the established principles, we will unswervingly expand financial opening up, maintain the continuity and stability of the policy of financial reform and opening up, resolutely implement the planned policy of financial reform and opening up, and further promote the two-way opening up of the financial market. We will deepen the reform of foreign exchange management, raise the level of liberalization and facilitation of cross-border trade and investment, earnestly safeguard the legitimate rights and interests of foreign investors, and create a more convenient and friendly investment environment for domestic and foreign investors.

The safe said earlier that it will continue to actively support the opening up of financial markets to the outside world, meet the expanding investment needs of foreign investors in China's financial markets, and attract global long-term capital to China's financial markets.

According to the safe, China's determination to open wider to the outside world and a series of reform measures being promoted have made China's financial market more and more attractive to foreign investment. China's stock market and bond market have been included in a number of important global indicators, but also make foreign investors have a strong demand for the allocation of China's financial market. In the first quarter of this year, foreign institutions bought a net US $19.4 billion of Chinese stocks and foreign institutions bought US $9.5 billion of Chinese bonds, up sharply from the same period last year and the fourth quarter of last year.

Third, have a wealth of experience and adequate policy tools to deal with fluctuations in the foreign exchange market.

The policy support is the guarantee to maintain the overall stability of the RMB exchange rate.

Pan Gongsheng stressed that he has accumulated rich experience and sufficient policy tools to deal with fluctuations in the foreign exchange market, and will take necessary counter-cyclical adjustment measures to strengthen macro-prudential management in the light of changes in the situation. We will crack down on violations of laws and regulations in the foreign exchange market and maintain a sound order in the foreign exchange market.

It is worth mentioning that Pan Gongsheng last made this statement in the fourth quarter of 2018.

On October 26, 2018, Pan Gongsheng, deputy governor of the people's Bank of China and director of the Foreign Exchange Bureau, said that he had taken and will continue to actively adopt macro-prudential policies and other measures to stabilize the expectations of the foreign exchange market.

In particular, he pointed out: "in recent years, in the process of dealing with fluctuations in the exchange rate and foreign exchange market, the people's Bank of China and the safe have also accumulated rich experience and policy tools and taken necessary and targeted measures in the light of changes in the situation. For those trying to short the renminbi, we all met a few years ago, and we know each other very well, and I think we all remember them all. "

Shortly after he made these remarks, the trend of the RMB exchange rate took a turn for the better, and the alarm near the 7 yuan barrier was lifted.

The regular meeting of the Monetary Policy Committee of the Central Bank in the first quarter stressed that the comprehensive use of a variety of monetary policy tools to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and to maintain a balance between interest rates, exchange rates, and the balance of payments.

The central bank's monetary policy implementation report for the first quarter of 2019 pointed out: "steadily deepen the market-oriented reform of the exchange rate, improve the managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies, and maintain the flexibility of the RMB exchange rate. We will strengthen macro-prudential management, stabilize market expectations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. "

Analysts say that the current regulatory policy toolbox is rich, and the "counter-cyclical" factor will continue to play the role of calming irrational market fluctuations. Macro-prudential foreign exchange management policies can also play a timely role in stabilizing capital, prices and expectations, taking into account that China still has foreign exchange reserves of more than US $3 trillion, which can play a strong role in supporting the RMB exchange rate. It is unlikely that the devaluation of the RMB will get out of control in the short term.

It is worth mentioning that on May 15, the central bank successfully issued two batches of central bank bills totaling 20 billion yuan in Hong Kong.

Offshore central bank vote + officials shouted, the central bank has stepped in, RMB short, take it!

Key Words:  RMB  macro  investment  capital market 

Will the RMB break 7? Just now, the deputy governor of the central bank gave a reassurance!

Translation 07:56:30AM May 20, 2019 Source:China Securities Journal

SMM News: two weeks in a row devaluation of more than 1%, off-shore, onshore RMB against the US dollar spot exchange rate has been lost 6.9 yuan, 7 yuan integer gate exposed again.

Since the "8 / 11 exchange rate reform", the RMB exchange rate has experienced several ups and downs but has never "broken 7". Will the $7 checkpoint be safe this time?

On 19 May, Pan Gongsheng, deputy governor of the people's Bank of China and director of the State Administration of Foreign Exchange, said in an interview with the media: "We fully have the foundation, confidence and ability to maintain the stable operation of China's foreign exchange market. We will maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. "

It is worth mentioning that on May 15, the central bank successfully issued two batches of central bank bills totaling 20 billion yuan in Hong Kong.

Offshore central bank votes + officials shouted that the central bank had stepped in. RMB short, take it!

The 7 yuan pass is just around the corner.

On May 17, the offshore renminbi closed at an all-day low of 6.9486 yuan against the US dollar, while the onshore renminbi closed at 6.9138 yuan against the US dollar, the lowest in intraday trading at 6.9188 yuan, both falling to their lowest level since early December 2018.

Offshore and onshore renminbi have been lost 6.9 yuan, and according to the current rate of devaluation, the 7 yuan barrier will soon face a test.

Statistics show that this week, the offshore renminbi depreciated by 1036 points, by 1.51%, and depreciated by more than 1.5% for the second week in a row. The onshore renminbi depreciated by 1020 points, 1.5 per cent and more than 1 per cent for two weeks in a row.

The devaluation of the renminbi against the dollar began in late April. Over a period of four weeks, the RMB exchange rate wiped out all the gains of the previous few months.

The RMB exchange rate has depreciated rapidly against the US dollar since April

This situation is quite similar to the round of RMB depreciation from June to August 2018, mainly because the deterioration of the external environment has a greater impact on market psychological expectations.

It is not difficult to find that the devaluation of the RMB market exchange rate is much faster than the midpoint, indicating that the devaluation of the exchange rate is mainly dominated by market forces.

The deterioration of the external environment has obviously impacted market expectations, and the real impact on China's economic growth prospects and trade surplus is difficult to measure and needs to be further observed. It is reasonable for the main body of the market to take a cautious approach for the time being, and the RMB exchange rate may continue to weaken or even overshoot due to the influence of market sentiment.

The strength of the dollar index has also contributed to the appreciation of the dollar against the renminbi. Analysts said that the current overseas major economies in the "strong United States, strong European weak" pattern is still the same, the performance of the dollar index is much stronger than many institutions expected at the beginning of the year. The US dollar index continues the operating pattern of strong volatility, causing certain pressure on the stability of the RMB exchange rate.

Since the "8 / 11 exchange rate reform", the RMB exchange rate has experienced several ups and downs, but it has never "broken 7". Will this round of RMB break 7?

The probability is still small, the reason lies in Pan Gongsheng's answer to the reporter's question.

First, the steady operation of economy and finance provides a strong fundamental support for the RMB exchange rate.

Strong fundamental support is the basis for maintaining the overall stability of the RMB exchange rate.

Pan Gongsheng said: the steady operation of China's economy and finance has provided strong fundamental support for maintaining a reasonable and stable foreign exchange market and RMB exchange rate. Since the beginning of this year, China's foreign exchange market has been operating smoothly, foreign capital inflows have increased, foreign exchange reserves have risen steadily, and the foreign exchange market is expected to be stable as a whole.

The rise of internal and external risk factors in the short term has an impact on market sentiment. This effect may be difficult to eliminate quickly, but it is not enough to be a trend factor in the trend of the RMB exchange rate, which ultimately depends on fundamentals.

The economy has had a better-than-expected start to the year. At present, there has been no obvious change in the fundamentals of the economy, tax reduction and fee reduction and the "wide credit" policy to support the real economy have gradually taken effect, and the resilience of domestic economic growth is obvious. In the long run, China's development is still in a period of important strategic opportunities, with sufficient resilience, great potential, and continuous burst of innovative vitality, and the long-term trend of economic improvement has not and will not change. Economic fundamentals will continue to form an effective support for the RMB exchange rate, there is no basis for a significant devaluation of the RMB exchange rate.

Even compared with the second half of 2018, the current RMB exchange rate is still in a better environment, when domestic economic growth was affected by both the local credit crunch and the deterioration of the external environment, downward pressure was greater, and market expectations were more cautious.

Second, we will further promote the two-way opening of the financial market.

Foreign capital inflows also play a positive role in maintaining the overall stability of the RMB exchange rate.

Pan Gongsheng stressed: in accordance with the established principles, we will unswervingly expand financial opening up, maintain the continuity and stability of the policy of financial reform and opening up, resolutely implement the planned policy of financial reform and opening up, and further promote the two-way opening up of the financial market. We will deepen the reform of foreign exchange management, raise the level of liberalization and facilitation of cross-border trade and investment, earnestly safeguard the legitimate rights and interests of foreign investors, and create a more convenient and friendly investment environment for domestic and foreign investors.

The safe said earlier that it will continue to actively support the opening up of financial markets to the outside world, meet the expanding investment needs of foreign investors in China's financial markets, and attract global long-term capital to China's financial markets.

According to the safe, China's determination to open wider to the outside world and a series of reform measures being promoted have made China's financial market more and more attractive to foreign investment. China's stock market and bond market have been included in a number of important global indicators, but also make foreign investors have a strong demand for the allocation of China's financial market. In the first quarter of this year, foreign institutions bought a net US $19.4 billion of Chinese stocks and foreign institutions bought US $9.5 billion of Chinese bonds, up sharply from the same period last year and the fourth quarter of last year.

Third, have a wealth of experience and adequate policy tools to deal with fluctuations in the foreign exchange market.

The policy support is the guarantee to maintain the overall stability of the RMB exchange rate.

Pan Gongsheng stressed that he has accumulated rich experience and sufficient policy tools to deal with fluctuations in the foreign exchange market, and will take necessary counter-cyclical adjustment measures to strengthen macro-prudential management in the light of changes in the situation. We will crack down on violations of laws and regulations in the foreign exchange market and maintain a sound order in the foreign exchange market.

It is worth mentioning that Pan Gongsheng last made this statement in the fourth quarter of 2018.

On October 26, 2018, Pan Gongsheng, deputy governor of the people's Bank of China and director of the Foreign Exchange Bureau, said that he had taken and will continue to actively adopt macro-prudential policies and other measures to stabilize the expectations of the foreign exchange market.

In particular, he pointed out: "in recent years, in the process of dealing with fluctuations in the exchange rate and foreign exchange market, the people's Bank of China and the safe have also accumulated rich experience and policy tools and taken necessary and targeted measures in the light of changes in the situation. For those trying to short the renminbi, we all met a few years ago, and we know each other very well, and I think we all remember them all. "

Shortly after he made these remarks, the trend of the RMB exchange rate took a turn for the better, and the alarm near the 7 yuan barrier was lifted.

The regular meeting of the Monetary Policy Committee of the Central Bank in the first quarter stressed that the comprehensive use of a variety of monetary policy tools to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and to maintain a balance between interest rates, exchange rates, and the balance of payments.

The central bank's monetary policy implementation report for the first quarter of 2019 pointed out: "steadily deepen the market-oriented reform of the exchange rate, improve the managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies, and maintain the flexibility of the RMB exchange rate. We will strengthen macro-prudential management, stabilize market expectations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. "

Analysts say that the current regulatory policy toolbox is rich, and the "counter-cyclical" factor will continue to play the role of calming irrational market fluctuations. Macro-prudential foreign exchange management policies can also play a timely role in stabilizing capital, prices and expectations, taking into account that China still has foreign exchange reserves of more than US $3 trillion, which can play a strong role in supporting the RMB exchange rate. It is unlikely that the devaluation of the RMB will get out of control in the short term.

It is worth mentioning that on May 15, the central bank successfully issued two batches of central bank bills totaling 20 billion yuan in Hong Kong.

Offshore central bank vote + officials shouted, the central bank has stepped in, RMB short, take it!

Key Words:  RMB  macro  investment  capital market