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Yesterday, the onshore RMB continued to rise after jumping more than 700 points against the US dollar, rising more than 1000 points in the day, with a daily increase of 1.47 per cent, the highest in nearly 10 years since November 5, 2011. Offshore RMB rebounded quickly after falling below the 6.66 mark against the US dollar, breaking through the 6.61 mark, setting a new high in more than two years. As of 19:00, the onshore and offshore RMB against the U.S. dollar were reported at 6.6114 and 6.6071 respectively.
At a time of global market uncertainty, the two-way volatility of the RMB exchange rate has increased and its flexibility has increased significantly. On the previous day, the onshore RMB exchange rate against the US dollar hit the lowest 6.7537, with an intraday decline of more than 600 points; the offshore RMB fluctuated more than 1500 points against the US dollar, the largest intraday fluctuation since August 2015.
In the view of industry insiders, this trend of RMB exchange rate is a full reflection of market uncertainty and other unstable factors. In the short term, the fluctuation characteristics of the RMB trend will be more obvious. Market players should actively adapt to the two-way fluctuation of exchange rate.
"Factors that affect the appreciation and depreciation of the RMB exchange rate exist at the same time. Sometimes the appreciation factor prevails, and sometimes the depreciation factor dominates, resulting in the RMB exchange rate showing multiple equilibrium characteristics of non-linear random wandering." Bank of China Securities global chief economist Guan Tao said, in the short term, economic recovery good cash, foreign exchange policy adjustments, the spread of overseas epidemics, financial markets and other factors may trigger market sentiment fluctuations.
Wang Chunying, deputy director of the State Administration of Foreign Exchange and spokesperson, recently stated that it is necessary to fully recognize the support of the domestic economy in the face of the RMB exchange rate, but also to pay close attention to various external instability and uncertain factors that may keep the RMB up and down., Two-way fluctuations.
This trend or not lasting. "Uncertainty on an international scale triggers phased risk aversion, and the fading out of countercyclical factors will also increase flexibility, but these factors are not strongly trending." Societe Generale Research believes that as uncertainties gradually dissipate, the logic of RMB exchange rate trading will return to fundamentals. It is expected that by the end of 2020 and the first quarter of 2021, the RMB exchange rate will regain its appreciation momentum.
The factors supporting the steady appreciation of the renminbi are mainly due to the fundamentals of the economy, the increase in demand for the renminbi and the weakening of the dollar.
"China's economic performance is outstanding on a global scale and will attract continued capital inflows." Hang Seng China chief economist Wang Dan said.
UBS Wealth Management Investment Director's Office believes that the dollar will decline in the medium to long term. The current market is increasingly concerned about the size of U.S. debt, which is not conducive to the dollar's safe-haven demand; at the same time, the dollar no longer has a spread advantage over other major currencies.
Yesterday, the dollar index continued to fall, the day fell to 0.5, lost 93 mark. As of 19:00, the dollar index was at 92.8517.
"In market fluctuations, companies should proactively and rationally manage the exchange rate risks they face." Lian Ping, chief economist and director of the Research Institute of plant credit investment, said that enterprises should actively choose RMB as the main payment and settlement currency in investment, import and export, and strive to diversify the settlement of payment currencies and reduce the proportion of US dollars.
(Source: Shanghai Securities News)
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