RMB rebound trend to continue
The renminbi has rebounded moderately since late July, thanks to a slight improvement in the external environment and rising market confidence boosted by a number of economic stimulus measures, and this trend is likely to extend into the following months, experts said.
The onshore USD/CNY briefly touched 7.115 in morning trade on Monday, the highest level in a month.
Exchange rate movements are often influenced by multiple internal and external factors. Talking about the reasons why the RMB exchange rate has been higher for several days, Zhou Maohua, a macro researcher in the Financial Markets Department of Everbright Bank, said that from the domestic situation, on the one hand, the fundamentals are solid. Recently released data show that the economy maintains the trend of recovery and expansion, the central bank exceeded the expected interest rate cuts, increase the implementation of macroeconomic policies, boosting market expectations for economic recovery. The first half of foreign trade exports and trade surplus both exceeded expectations, the balance of payments, foreign exchange reserves stabilized above 3.2 trillion U.S. dollars, the fundamentals are solid for the RMB exchange rate to provide solid support. On the other hand, the attractiveness of RMB assets has increased. Domestic fundamentals are improving, the macro policy environment is ideal, coupled with the valuation of RMB assets as a whole is in a depression, the market is gradually accumulating bullish sentiment towards RMB assets.From the perspective of external factors, although there are divergent views on the pace and intensity of overseas interest rate cuts, there is now a basic consensus that developed economies are gradually transitioning to the interest rate cut cycle. Zhou Maohua said that up to now, more than 20 economies around the world have implemented interest rate cuts, the first half of the European Central Bank, the Bank of Canada took the lead in the start of interest rate cuts, the Federal Reserve recently released the year may start the interest rate reduction cycle of the signals of the developed economy's policy spillover impact on our country will gradually weaken.
Looking forward to the subsequent trend of the RMB, the industry is generally more optimistic. Li Liuyang, a researcher at the CICC Research Institute, believes that the RMB exchange rate may not easily return to the previous state of low flexibility in the short term, and the flexibility of two-way fluctuations may increase. The longer-term trend of the RMB exchange rate depends on the repair of China's economic expectations and the direction of interest rates, as well as changes in the overseas economic and financial situation. If overseas asset returns fall and volatility rises systematically in the future, this will favor the return of cross-border capital and the strengthening of the yuan. "The yuan exchange rate will continue its recovery in the coming months." Wang Youxin, a senior researcher at the Bank of China Research Institute, said that the complexity of the global political and economic situation and the sharp fluctuations in the financial market may prompt more international capital to look for a "safe haven" around the world, while the RMB exchange rate has a high degree of stability, the RMB assets are in the value of the depressions and China's endogenous growth momentum continues to strengthen. The Chinese economy continues to strengthen its endogenous growth momentum. It is foreseeable that RMB assets will receive more attention at present and in the coming months.
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