RMB Exchange Rate Falls to New Low Since November 2022
On June 26, both the exchange rate of RMB against the US dollar in the onshore and offshore markets fell below 7.23 yuan intraday, a new low since the end of November 2022.
Since late April, the RMB exchange rate has fallen considerably. According to expert analysis, this round of RMB depreciation is not only affected by external forces, but also caused by internal factors, but it is still a phased phenomenon. A new round of policy measures to stabilize the economy has been introduced one after another, which will enhance the endogenous growth momentum of the economy and consolidate the upward trend in fundamentals. At the same time, the strengthening of the US dollar is difficult to sustain, and the pressure on the depreciation of the RMB exchange rate is expected to gradually ease, and two-way fluctuations will continue to be normal.
Increased short-term volatility
On June 26, the exchange rate of offshore RMB against the U.S. dollar fell below 7.22 yuan, 7.23 yuan, and 7.24 yuan in succession during the intraday session, hitting a new low since the end of November 2022. As of 16:30, the offshore RMB exchange rate was at 7.2323 yuan, down 156 basis points from the previous closing price.
The onshore RMB exchange rate fell below 7.23 yuan during the session and closed at 7.2219 yuan, down 281 basis points from the previous closing price.
"The risk aversion sentiment in the market is heating up, the buying of US dollars has increased, and the short-term pressure on the onshore and offshore RMB exchange rates still exists." Talking about the RMB exchange rate market that day, a foreign exchange trader said so.
Wind data shows that since the beginning of this year, the onshore RMB exchange rate against the US dollar has fallen by about 4%, and the offshore RMB exchange rate has fallen by about 4.5%.
Combined influence of multiple factors
Market experts said that the recent operation of the foreign exchange market has been affected by various factors at home and abroad.
Overseas, the direction of the Federal Reserve's monetary policy has caused disturbances to the RMB exchange rate. According to the research report of China Securities Pengyuan Credit Rating Co., Ltd., although the Federal Reserve suspended raising interest rates in June, it is expected that it may still raise interest rates 1 to 2 times within this year.
Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, analyzed that the recent Federal Reserve officials have expressed their attitude towards "hawks". The expectation of another interest rate hike in July is heating up, which will promote the strengthening of the US dollar index and have a significant impact on the short-term trend of the RMB exchange rate. "The divergence of monetary policies between China and the United States has led to a high interest rate gap between China and the United States, and the short-term pressure on the RMB exchange rate is unavoidable." said Pang Ming, Chief Economist and Research Director of Jones Lang LaSalle Greater China.
Domestically, since the second quarter, economic recovery has slowed down, which may also have affected the RMB exchange rate trend to a certain extent. Lian Ping, Chief Economist and Dean of Zhixin Investment Research Institute, believes that since the second quarter, the support for the RMB exchange rate has basically decreased, and the reduction in interest rates has increased the pressure on the RMB exchange rate to depreciate.
In addition, Pang Ming pointed out that factors such as the decline in the willingness of enterprises to export foreign exchange settlements, the high exposure to overseas carry trades, and the concentrated purchase of foreign exchange dividends by overseas listed Chinese companies have also brought some pressure on the RMB exchange rate. But he stressed that the pressure was "short-term, periodic and seasonal".
Since late April, the RMB exchange rate has fallen considerably. According to expert analysis, this round of RMB depreciation is not only affected by external forces, but also caused by internal factors, but it is still a phased phenomenon. A new round of policy measures to stabilize the economy has been introduced one after another, which will enhance the endogenous growth momentum of the economy and consolidate the upward trend in fundamentals. At the same time, the strengthening of the US dollar is difficult to sustain, and the pressure on the depreciation of the RMB exchange rate is expected to gradually ease, and two-way fluctuations will continue to be normal.
Increased short-term volatility
On June 26, the exchange rate of offshore RMB against the U.S. dollar fell below 7.22 yuan, 7.23 yuan, and 7.24 yuan in succession during the intraday session, hitting a new low since the end of November 2022. As of 16:30, the offshore RMB exchange rate was at 7.2323 yuan, down 156 basis points from the previous closing price.
The onshore RMB exchange rate fell below 7.23 yuan during the session and closed at 7.2219 yuan, down 281 basis points from the previous closing price.
"The risk aversion sentiment in the market is heating up, the buying of US dollars has increased, and the short-term pressure on the onshore and offshore RMB exchange rates still exists." Talking about the RMB exchange rate market that day, a foreign exchange trader said so.
Wind data shows that since the beginning of this year, the onshore RMB exchange rate against the US dollar has fallen by about 4%, and the offshore RMB exchange rate has fallen by about 4.5%.
Combined influence of multiple factors
Market experts said that the recent operation of the foreign exchange market has been affected by various factors at home and abroad.
Overseas, the direction of the Federal Reserve's monetary policy has caused disturbances to the RMB exchange rate. According to the research report of China Securities Pengyuan Credit Rating Co., Ltd., although the Federal Reserve suspended raising interest rates in June, it is expected that it may still raise interest rates 1 to 2 times within this year.
Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, analyzed that the recent Federal Reserve officials have expressed their attitude towards "hawks". The expectation of another interest rate hike in July is heating up, which will promote the strengthening of the US dollar index and have a significant impact on the short-term trend of the RMB exchange rate. "The divergence of monetary policies between China and the United States has led to a high interest rate gap between China and the United States, and the short-term pressure on the RMB exchange rate is unavoidable." said Pang Ming, Chief Economist and Research Director of Jones Lang LaSalle Greater China.
Domestically, since the second quarter, economic recovery has slowed down, which may also have affected the RMB exchange rate trend to a certain extent. Lian Ping, Chief Economist and Dean of Zhixin Investment Research Institute, believes that since the second quarter, the support for the RMB exchange rate has basically decreased, and the reduction in interest rates has increased the pressure on the RMB exchange rate to depreciate.
In addition, Pang Ming pointed out that factors such as the decline in the willingness of enterprises to export foreign exchange settlements, the high exposure to overseas carry trades, and the concentrated purchase of foreign exchange dividends by overseas listed Chinese companies have also brought some pressure on the RMB exchange rate. But he stressed that the pressure was "short-term, periodic and seasonal".
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