RMB breaks 7.00

With the announcement by the European Central Bank on Thursday of a 10 basis point cut to – 0.50%, the RMB exchange rate surged by more than 500 points, breaking the 7.08 level, and continued to rise by more than 300 points on Friday, breaking the 7.04 level. The next step is to target the 7.00 level against the U.S. dollar. It seems that it will recover 7.00 soon and return to the era of six again, but this is only the normal fluctuation of the exchange rate market. Although the strength of the RMB is clearly seen, it is It will not break the 7.00 level for the time being, but will fluctuate around the 7.00 width.
This time, the European Central Bank not only announced to cut interest rates, but also announced to restart the QE policy. It bought 20 billion euros of bonds every month, and continued to release liquidity to the market. It also lowered its economic growth expectations for this year and next years. The difficulty of the euro area economy is obvious. In fact, not only Europe, but also the United States are not there. Trump urged the Federal Reserve to reduce the interest rate to 0, which is obviously what the European Central Bank has seen Negative interest rate means that even if the United States does not adopt negative interest rate, it should also implement zero interest rate. Once it had full confidence in the U.S. economy, it did not know where to go. It actually wanted to save the U.S. economy with zero interest rate.
From a global perspective, many central banks have cut interest rates, while China has implemented a comprehensive and targeted reduction of interest rates together, which is also a significant release of liquidity. However, China’s benchmark interest rate is still maintained at 1.75%, which belongs to the level of conventional interest rates. Obviously, China’s economy is more resilient, and there is more room for monetary policy. China has more tools to ensure that the economy operates reasonably In order to speed up the economic transformation and upgrading, China’s economy is more stable and flexible compared with other countries. This is also reflected in the exchange rate. Although the RMB broke seven pieces of exclamations and the United States also listed China as a currency manipulator, China was not moved. This sharp rise in the RMB exchange rate shows that the RMB is still a strong currency.
As for the fluctuation of RMB, at present, it will not be interpreted in depth after breaking 7. That is to say, RMB will fluctuate in the range near 7.00. In a short time, although there is a great momentum to recover 7.00, it will fluctuate above 7.00 for the time being. There is no great incentive to recover 7.00 quickly. Since it has already broken 7, it will fully digest the short position Factors, complete a long time of circuitous fluctuation above 7.00, even do not exclude the deep deduction in the direction of 7.30.
RMB is a strong currency, which has been clearly seen all over the world. The wide fluctuation of RMB is also clearly seen all over the world. RMB is becoming a mature currency in the global foreign exchange market, with balanced fluctuation in a wide space. Therefore, when the RMB falls sharply in a short term, it does not cause capital outflow. On the contrary, China’s attracting foreign investment continues to grow, which is in the official public interest According to the data of the first eight months, the world’s expectation of wide fluctuation of RMB has not aroused the anxiety and uneasiness of global appreciation or devaluation of RMB. Global investors are still optimistic about RMB for a long time, and continue to flow into China’s financial market, and invest heavily in bonds and stocks, which has become an irreversible historical trend.
As RMB bonds are included in the international index, China’s stocks and bonds are favored by international investment institutions. China’s treasury bonds are particularly popular. Many foreign investors buy a lot of China’s treasury bonds, and China’s stock market and bond market open to the outside world at a faster speed. China’s foreign exchange administration has announced that it has liberalized the quota limit of QFII and rqfii, which means that foreign investors have bought China’s stocks and bonds There is no scale restriction, the opening door of China’s stock market and bond market is completely opened, and China’s stock market and bond market has become a truly global stock market and bond market.
These bold and forward-looking decision-making measures constitute an important long-term support for the RMB. The RMB exchange rate is no longer distinguished by appreciation and depreciation, but defined by wide fluctuations. The RMB asset position held by global investors has also been included in the category of long-term asset allocation. The short-term fluctuation of the RMB exchange rate has not become an obstacle to the global capital flow into China RMB assets have become an important global asset, and the era of RMB has officially come.
Although the RMB will not recover the 7.00 pass in the short term, it is bound to maintain the expectation of stable appreciation in the medium and long term. Recovering the 7.00 pass is only a technical problem, and there is no big obstacle. This requires the foreign exchange market to recover the 7.00 pass through full game and long-term trading practice. Finally, in the wide oscillation, the RMB will not only recover the 7.00 pass, but also continue to do so Move in a stronger direction.