Scripture Society's Editorial | If the RMB exchange rate breaks 7

Under the high inflation and baking of the Economic Observation News Agency, a global exchange market storm that was set off by a strong dollar was intensified. The currency of the major economies has fallen below a new low for decades, and the strong RMB exchange rate has also been sluggish.

6.7, 6.8, 6.9970. The RMB short recently psychological barrier to the psychological barrier of offshore RMB (CNH) to the US dollar to 7. However, on September 8th, CNH was quickly pulled up near the position of 6.95. I do n’t know if it was the 75 -basis point of the European Central Bank's historic interest rate hike to boost the euro. Do not dare to trade opponents with the central bank, or escape or be beaten. On the same day, the 70 -year -old Queen Elizabeth II died. The economic prospects of the UK are worrying and the US dollar stronger, and the British pounds degraded to the US dollar to nearly 40 years.

The global currency storm began in April has not yet stopped. According to the People's Bank of China, the US dollar has appreciated by 14.6%since this year. In this context, other reserve currencies in SDR baskets have depreciated sharply on the US dollar, and the RMB depreciates the smallest than other non -US dollar currencies. Moreover, thanks to China's economic toughness, the Chinese foreign exchange market is currently operating normally; the overflow effect of US monetary policy has an impact, but it is controllable.

In reality, the negative factors such as the Federal Reserve's interest rate hikes and the repeated epidemic situation have impacted. In a strong US dollar cycle, the renminbi decreases, the short -term break is 7 or a major probability event. Moreover, trade data in August is far lower than expected, which means that in recent years, the fundamental factors that support the stronger RMB exchange rate may be changing.

In fact, the RMB has been suffered by the pressure of breaking 7 times. The RMB to the US dollar in August 2019 7. Our mentality is "broken, stone can break, but not to be strong." The RMB broke 7 in May 2020, and the market was still calm, and many people even thought that the exchange rate was not as attention as the past.

It turns out that after the "811" exchange reform in 2015, the RMB exchange rate is more flexible and flexible; the status of Chinese folk international assets and liabilities has improved significantly, and the possibility of renminbi disorderly depreciation is unlikely.

But this time may be different. Both the current real estate and epidemic risks have hindered the advantages of risk aversion and decentralization attributes in RMB. On the surface, the direct reason for the depreciation of this wave of RMB exchange rates is the differentiation of strong US dollars and Sino -US currency policy, but fundamentally, the domestic economic recovery is still solid. The key to the RMB 7 wins and losses may still be in real estate, depending on whether real estate sales and residential loans can be significantly improved. This takes time to modify and adjust.

In a critical historical period, if the RMB exchange rate breaks 7 is deemed to be the key point of inducing depreciation and the risk of capital outflow, the unstable currency value may affect the overall economic situation, and the defense 7 is a must -have for management. As Liu Guoqiang, deputy governor of the Central Bank of China, said, "The RMB exchange rate is reasonable and balanced, and basic stability is what we like to see. We also have the strength to support it. In the event of a problem, it will be supported by strength and stabilizing the exchange rate.

I should believe that the central bank's will and ability. China has experienced similar tests. At the time of "811", we spent $ 1 trillion (foreign exchange reserve) for the stabilization rate. Not to mention that if you face the cost of a war in the exchange rate again, what you want to ask is that if the RMB exchange rate really breaks 7 in the short term, weigh the advantages and disadvantages, what is the best choice for the central bank?

In the long run, even if the RMB exchange rate is broken in the short term, with the relief of the epidemic risk, the stability of real estate, the rebound of China's economic growth, the US economy has gradually entered the decline, and the RMB exchange rate against the US dollar will return to normal two -way fluctuations. After all, the market -oriented reform of exchange rates also requires the central bank to not intervene.

Under the international currency system of the US dollar "one yuan independent", the RMB internationalization road is obstructive. In this regard, the renminbi still has to practice internal skills. Don't forget, as a price, the exchange rate itself has the effect of regulating the relationship between foreign exchange supply and demand. At present, a balance between the price of the exchange rate and the market -oriented reform is a test for the central bank.

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