The central parity of the yuan was lowered by 414 points today, and it was lowered for the second consecutive trading day. The central parity of the RMB against the US dollar was 414 points lower than the previous day to 6.7495. The median price depreciated to the lowest since January 25, 2019, the largest since July 20, 2018.
Jing Naiquan, a columnist of China Financial Information Network and associate professor of finance at Zhejiang University, believes that a managed floating exchange rate system is a safety valve that controls China's financial risks. It is expected that the RMB exchange rate will fluctuate in the short-term and two-way, and it will be stable in the medium and long term.
In response to this wave of gains before the renminbi, FXTM ChinaAnalystLiu Min told the First Financial Reporter that the main reason for the sharp rise in the RMB before the holiday was that the Fed’s interest rate hike was more changed than before, showing a strong dollar “doves” color. The US dollar weakened across the board and pushed the exchange rate of the RMB against the US dollar to rise.
At 3 am on January 31, Beijing time, the Federal Reserve’s interest rate meeting in January decided not to raise interest rates, and deleted the wording of further gradual interest rate hikes in the post-meeting statement. The market's expectation that the Fed will raise interest rates twice in 2019 will be lowered to one or no interest rate hikes. There are also views that the Fed's current rate hike cycle may end.
Liu Min also believes that the China Foreign Exchange Administration raisedQFIIFactors such as the amount of foreign investment in A-shares in January also provided the basis for the rise of the renminbi.
On January 14, the State Administration of Foreign Exchange announced that it would expand the total amount of QFII from $150 billion to $300 billion. Statistics, this yearNorthbound fundsThrough Shanghai,Deep shareThe total turnover was about 378.1 billion yuan, and the Shanghai and Shenzhen stocks totaled 43.71 billion yuan, which again set a net purchase record. Haitong Securities believes that with the increasing opening up of China's financial market, it is a general trend for foreign investors to increase the proportion of A-shares. It is estimated that the annual inflow of A-shares will be about 400 billion yuan.
International financial strategy experts told Matsuzaka that at the China Xinfu Strategy Conference, if the RMB exchange rate could be maintained in 2019, the stock market volatility would not be very large. Moreover, if the RMB exchange rate forms a phased appreciation, the short-term rebound of the market will continue.
Qianhai Open SourcefundChief economist Yang Delong told the First Financial Reporter that China and the United States are expected to reach a framework agreement in 2019, thereby reducing or even eliminating an important uncertainty affecting the market. This is an opportunity for the stability of the RMB currency and also an A share. The opportunity for the market to rise. According to the theory of purchasing power parity, the renminbi is still undervalued relative to the dollar, and there is no basis for long-term depreciation. At present, the RMB has been successfully incorporated into the IMF's SDR and become an international reserve.currencyThis stems from the stability of the currency of the renminbi.