Following the central bank’s signing of the Chinese People’s Bank on the use of the Debt Instrument Central Clearing System in SeptemberbankAfter the memorandum of cooperation on the bill, the central bank officially issued central bank bills in Hong Kong on November 7. On the same day, the central bank passed the Hong Kong Monetary Authority's Debt Instrument Central Clearing System (CMU) bond bidding platform tointerest rateThe tender method issued 10 billion yuan three-month and 10 billion yuan one-year two-phase central bank bill, winning the bidinterest rateThey were 3.79% and 4.2% respectively.
Oriental Jincheng Chief MacroAnalystWang Qing told the "Securities Daily" reporter yesterday that on September 20, the People's Bank of China and the Hong Kong Monetary Authority signed the Memorandum of Understanding on the Issuance of Bills of the People's Bank of China by the Central Clearing System for Debt Tools, which aims to facilitate the issuance of the People's Bank of China in Hong Kong. Central bank bills. In addition to enriching Hong Kong's high-credit renminbi financial products and improving Hong Kong's renminbi yield curve, the market generally interprets it as a policy tool to stabilize the RMB exchange rate in the offshore market, that is, issuing notes will tighten the offshore market renminbi. Liquidity, raising the RMB interest rate in the offshore market, thus supporting the offshore RMB exchange rate.
Wang Qing said that in fact, the impact of this aspect has been reflected after the central bank announced this decision. Before September 20, the exchange rate of the RMB against the US dollar in the offshore market was lower than the onshore market exchange rate as the market normal; After the announcement of the central bank's entry into Hong Kong, the recent offshore market exchange rate has been slightly higher than the onshore market exchange rate, that is, the so-called "exchange price upside down" phenomenon has begun to appear frequently. This shows that before the implementation of the "Public Tickets", the "policy declaration effect" has been exerted, which has created a certain shock to the short-term renminbi in the offshore market and played a role in stabilizing the exchange rate of the offshore market. The central bank's official issuance in Hong Kong on November 7 is expected to further curb the expectation of RMB depreciation and enrich the toolbox for the central bank to regulate the RMB exchange rate in the offshore market. In the short term, the phenomenon of “inversion of exchange rate” in the onshore and offshore markets will continue to exist, and the possibility of RMB exchange rate “breaking 7” will become smaller.
Bank of ChinaWang Youxin, a foreign exchange researcher at the International Finance Institute, told the Securities Daily reporter yesterday that the central bank’s move to stabilize the exchange rate by tightening the renminbi liquidity in the offshore market and raising the cost of shorting the renminbi. The essence is that the interest rate is adjusted to the exchange rate. Similar operations have been very effective in early 2016 and at the end of May 2017. Second, the central bank’s first issue of central bank bills in Hong Kong has a strong signal. It is worth noting that the central bank rarely issued central bank tickets directly in the offshore market, the last time it was issued in London in October 2015. Therefore, this measure has a strong signal significance, releasing the determination of the central bank to stabilize the offshore exchange rate, which is conducive to rationally guiding market expectations. Third, in the medium and long term, it is conducive to promoting the internationalization of the RMB. The central bank's issuance of central bank bills in Hong Kong can improve the RMB yield curve in the offshore market and provide more RMB investment products for overseas investors, which is conducive to smoothing the circulation of RMB. Moreover, the direct participation of the central bank in the formation of the RMB yield curve in the offshore market is also conducive to controlling the pricing power of the RMB and avoiding the impact of hot money and speculative funds on interest rate and exchange rate prices.
Wang Youxin said that from the current situation, the central bank's policy focus is more on maintaining the steady growth of the domestic economy. Only by achieving internal balance, external balances such as exchange rates and cross-border capital flows are possible. The central bank will take measures to promote the development of private enterprises in the near future, and solve the problem of financing difficulties, especially to solve the problem of financing availability and improve the coverage, availability and convenience of financial services. In the future, the central bank will, together with the relevant departments, adopt a policy mix of “three arrows” from the three main financing channels of bonds, credit and equity to support private enterprises to expand financing channels.
(Article source: Securities Daily)