Sheng Songcheng: why has the RMB exchange rate increased dramatically recently?

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original title: Sheng Songcheng: why has the exchange rate of Renminbi recently increased dramatically?

writer is the people's Bank of China counselor, Sheng Songcheng, executive vice president of CEIBS Lujiazui International Finance Research Institute researcher at the CEIBS Lujiazui International Finance Research Institute of jade dragon. This article only reflects the author's opinion and does not represent the opinion of the organization.

since the middle of this month, the RMB exchange rate has increased significantly. The CFETS RMB exchange rate index has increased from 11 to 94.37 at the end of the month. The RMB has also appreciated against a basket of currencies, whether it refers to the basket of BIS currencies or the basket of SDR currencies. From the major currencies against the RMB exchange rate, in December 22nd, the Bank of RMB against the U.S. dollar rose above 6.57, continuous 6.56, 6.55 and 6.54 of the four pass, refresh a new high since September, offshore renminbi (US dollar) days also rose more than 200 points, hitting a new high since March; in addition, the renminbi relative to the yen, pound, the Swiss Franc has significant appreciation of the RMB exchange rate against the euro also early in the month after the shock to maintain a significant appreciation.

, we believe that the recent appreciation of the RMB exchange rate is mainly reflected in the current economic and financial situation in China. Domestic factors are the main factors, and at the same time, they will be influenced by market expectations.

first, the interest rate of our financial market is maintained high. The flow of international capital is often more sensitive to the interest rate of the financial market, and the interest rate of the financial market has a more direct impact on the exchange rate. Since this year, China's financial deleveraging continues to promote, liquidity is relatively tense, market interest rates remain at a high level. Since China's financial deleveraging, the Sino-US spread is generally expanded. At present, the yield of the 10 year treasury bonds in China has increased by 1.2 percentage points compared with the 2.7% at the end of the three quarter of 2016. Meanwhile, the yield of the US 10 year treasury bonds has increased by 0.6 percentage points over the same period, and the spread between China and the US has reached 1.5 percentage points.

second, near the end of the year, the market liquidity is relatively tense, seasonal factors also increase the market demand for the RMB. At present, the commercial banks to issue the AAA level for 1 months, 3 months and 6 month interbank deposit yields were 5.35%, 5.20% and 5.15%, were the highest in 2015 since the statistics of the historical record; the joint-stock banks and city commercial banks 1 month interbank deposit interest rate issue reached respectively 5.11% and 5.58%, 3 month interbank deposit certificates issued margin reached 5.04% and 5.48% respectively.

third, the central economic work conference still emphasizes risk prevention and has a greater impact on market expectations. The meeting pointed out that the "prudent monetary policy to maintain a neutral monetary supply, control the total gate, to maintain a reasonable growth of money and credit and social financing scale, and keep the RMB exchange rate at a reasonable and balanced level basically stable" signal to the market release of the monetary policy will not relax.

fourth, from the basic point of view, China's economy is running smoothly, and the export recovery is obvious. In November, official PMI data showed that the economic boom has picked up slightly, manufacturing PMI is 51.8%, 0.2 percentage points higher than last month, and the non manufacturing business activity index is 54.8%, up 0.5 percentage points from last month, which is located in the expansion area. Meanwhile, in the second half of this year, the year-on-year growth rate of fiscal expenditure has decreased significantly compared with the same period last year, while the cumulative increment of fiscal deposits is larger. There is still room for increasing investment. This year's economic growth is relatively guaranteed. In addition, consumption has also rebounded. In November, the retail sales of social consumer goods increased by 10.2% compared with the same period last year, up 0.2 percentage points from the previous month, and the actual year-on-year growth rate was 0.2 percentage points higher than that of the previous month, reaching 8.8%. It is worth mentioning that China's export has a more obvious rebound. In November, the growth rate of US dollar exports increased to 12.3% over the same period last year, a 5.4 percentage point increase from last month, and the acceleration of imports increased by 17.7% compared with last month, which has increased by 0.5 percentage points from the previous month.

fifth, the market is expected to increase the Fed's interest rate increases, while the impact of tax cuts in the United States remains to be tested. Before the Fed's increase in interest rates in mid December this year, the RMB was faced with a certain value of devaluation. With the increase of interest rate boots, the US financial market interest rate did not increase significantly on the day of raising interest rates, and the result of the open market operation Committee (FOMC) released by the Fed was weaker than market expectations. The tax reform in the United States intends to promote the repatriation of American overseas profits through tax incentives, which has a limited impact on the exchange rate of the RMB. According to China Merchants Securities estimates, the United States has caused American direct investment in China to repatriate profits up to around $15 billion, which need to exchange part should be far less than this, compared to China's foreign exchange market transaction scale (monthly average of $150 billion), almost no direct impact on the exchange rate of rmb.

, in the coming period, as the short-term factors fade away, the RMB exchange rate is expected to recede, but it will not fluctuate greatly, but it will remain basically stable. The RMB will remain at around 6.6 against the US dollar.

over the last one or two years, we have always stressed the basic stability of the RMB exchange rate. Since the second half of this year, we have repeatedly pointed out that this year, the exchange rate of RMB against US dollar is likely to fluctuate in the range of 6.5 to 6.6, or about 6.6. On the one hand, the substantial appreciation of the exchange rate is not conducive to maintaining our share in world trade, and China may miss the dividend of the current global economic recovery. On the other hand, the substantial depreciation of the exchange rate will also cause a lot of problems, not only the pressure on the capital outflow, but also the practice of promoting export by devaluation.


From: 盛松成:最近人民币汇率为什么大幅上升?
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