Market Expectations For Devaluation Of The Renminbi Have Reached A Higher Level Again.

In the short term, the main reason for the low RMB exchange rate in recent days is that the newly released foreign trade data and foreign exchange reserves data are "poor".

From a longer period of time, the increase in depreciation expectations is a natural reaction to China's domestic economy and global market economy.

A year ago, it was often said that "the trend of RMB appreciation will slow down". What worries us now is whether the renminbi will depreciate significantly.

China's economic stabilization and financial risks are all bad, and the Fed's rate hike is expected to boost the US dollar, which has become a factor to lower the exchange rate of the RMB against the US dollar.

And after August 11th this year, the intermediate price of the RMB exchange rate is further reform, a one-time devaluation of 3%, the exchange rate fluctuates closer to the market, and the depreciation is expected to rise.

Although RMB has joined the SDR (SDRs) for a while, it has temporarily boosted the confidence of the renminbi. However, judging from the current market reaction, in the short term, the two factors of "pushing up" and "pulling down" are still gaining the upper hand.

After the renminbi approaches the equilibrium exchange rate, the more severe market volatility will be

But as the Yi Ping Gang, vice president of the people's Bank of China [micro-blog] said earlier,

The growth trend of medium and high speed has not changed. There is still a big surplus in trade in goods. Foreign direct investment (FDI) and China's foreign direct investment (ODI) continue to grow, and foreign exchange reserves are also abundant. These factors determine the basis for the RMB's no sustained depreciation.

Yi Gang's words also show the strong determination of the monetary authorities to stabilize the exchange rate.

Of course, the cost of intervention by the monetary authorities to stabilize the exchange rate is increasing. In fact, part of the reason for the "shrinking" of foreign exchange reserves is that the central bank intervened in the market and consumed some "ammunition". However, there is no need to worry about the market, because China's foreign exchange reserves are very abundant.

Although the central bank is moving towards a floating exchange rate,

The tolerance of volatility will rise, the frequency of intervention will also decrease, but it will never be soft when necessary.

The renminbi will not be as strong as it used to be, but it would not be possible to have a "cliff type" depreciation.

Yi Gang said: "we now have a managed floating exchange rate system. The future goal is to clean up the exchange rate. This is a pitional process.

In the process of pition, under the best possible conditions, the central bank [micro-blog] will respect the decisive role of market supply and demand.

However, if this fluctuation exceeds a certain range, or there are some changes in the balance of payments discussed in the International Monetary Fund [micro-blog], or if there is a change in international capital flows, the central bank will also intervene decisively.

It is rare for the monetary authorities to make such a clear public statement.