The central bank has again stabilized the exchange rate offshore!
On May 15, the central bank issued a message saying that two consecutive RMB central bank bills were issued in Hong Kong that day, including three-month and one-year central bank bills of 10 billion yuan each, and the winning rates were 3.00% and 3.10% respectively. The total number of bids for the issuance exceeded 100 billion yuan, and the main body of the subscription included commercialbank, fund, investmentbank,centralbank, international financial organizations and other types of offshore market investors.
This news seems to be unremarkable, but in combination with the special time point when the central bank issued the central bank bill in Hong Kong, its policy intentions have come a long way. Since the issuance of central bank bills in Hong Kong can recover offshore renminbi liquidity, increase the offshore market interest rate, and raise the cost of shorting the renminbi, thus achieving the goal of stabilizing the exchange rate. Combined with the market changes that the RMB depreciation is expected to heat up in recent days, it can be seen that the central bank has issued a central bank bill at this time, and the intention of stabilizing the exchange rate is obvious.
In fact, in addition to the heavy losses on the offshore RMB exchange rate on Monday, the daily exchange rate has reached 600 basis points. The RMB exchange rate between yesterday and today has a trend of correction. Some analysts pointed out that there is no shortage of central bank stability. As of 13:15 on May 15th, the onshore RMB exchange rate was reported at 6.8761, with a depreciation of only 93 basis points; the offshore RMB exchange rate was reported at 6.9053, a slight increase of 9 basis points from yesterday.
Many analysts pointed out that before the external negative news came out, the probability of the RMB exchange rate falling below 7 in the short term is not large. More importantly, the current trend of RMB exchange rate is characterized by event-driven and long-short interweaving. For enterprises and individuals, instead of gambling unilateral appreciation or depreciation, it is better to adhere to the concept of financial neutrality and manage exchange rates through hedging instruments. Risk, otherwise it is easy to be "face".
More open and transparent transfer of stable exchange rate policy intentions
The 20 billion yuan offshore banknote issued this time is the third time that the central bank issued RMB central bank bills through the Hong Kong Monetary Authority's debt instrument central clearing system (CMU) bond bidding platform after November last year and February this year.
Excluding the issuance of central bank bills offshore, which can enrich Hong Kong's high-credit-grade RMB financial products, improve the yield curve of RMB offshore market bonds, and promote the medium- and long-term role of the international use of the RMB, a more realistic significance of the current issuance of central bank bills is that As a tool to recover market liquidity, the purpose of stabilizing the exchange rate can be achieved.
German businessbankZhou Hao, a senior economist in Asia, once said that the central bank’s move has the purpose of stabilizing the RMB exchange rate in the short-term and establishing a perfect offshore RMB market interest rate curve for the medium and long term.
"In the short term, the issuance of central bank bills will have a certain degree of tightening effect on the liquidity of the offshore market, which has caused a 'rate hike' effect on the market to some extent." Zhou Hao said that once the offshore market appears The more obvious renminbi short-selling sentiment, the issuance of central bank bills can raise the interest rate level of the offshore renminbi market, in order to increase the cost of shorting the renminbi and curb the renminbi short.
From the perspective of maintaining the stability of the offshore RMB exchange rate, even if the central bank does not issue a central bank bill in Hong Kong, it can easily adjust the offshore RMB liquidity and “explode” the RMB short position. In fact, some analysts pointed out that the central bank’s issuance of central bank bills in Hong Kong is a policy intention to convey a stable exchange rate to the market more openly and transparently.
“CNH usually reflects the market's expectation of the RMB exchange rate more than CNY, but the central bank has strong control over the offshore market. In the past, we usually observed some of the branches of Chinese banks in the offshore market. Operation (such as forward purchase of foreign exchange, foreign exchange swaps, etc.) to speculate on the policy intentions of the monetary authorities behind it." A Hong Kong foreign exchange trader told the brokerage Chinese reporter, but if the central bank issued a central bank bill in Hong Kong, it would be directly oriented Participants in the offshore market publicly communicate their own policy stances, which in fact increases policy transparency, strengthens communication with the market, and helps stabilize market expectations.
Zhou Hao also said that using the central bank to regulate market liquidity, the market can judge the central bank's policy intention through the issuance, expiration and renewal of the central bank bill, which can increase the transparency of the policy, and the central bank can adopt a more systematic Ways to transfer their monetary policy stance to the offshore renminbi market.
"Invisible hand" pays more attention to foreign exchange sales rather than specific exchange rate points
Since the external factors were fermented again last week, the market is expected to turn sharply. The RMB exchange rate, which has not fluctuated greatly for a long time, once again staged a “roller coaster” market. The RMB exchange rate continued to open the sharp drop mode after the opening of the market on Monday. On May 13, the onshore and offshore RMB exchange rate against the US dollar fell sharply again. The intraday decline was over 600 basis points, of which the offshore exchange rate fell nearly 1% on the day.
It is undeniable that the trigger for this round of RMB plunging is the external environment, but the real cause of the exchange rate declining for many consecutive days is the short selling of overseas institutions.
Senior foreign exchange expert Han Huishi told the brokerage Chinese reporter that the driving factor for the rapid exchange rate depreciation in recent days is not the market supply and demand relationship (that is, the customer-responsible passengers), but the speculative-led (mainly financial institution-led transactions). The dollar in the offshore market has soared, followed by the onshore market, which often means that institutional speculation is likely to be a major factor in devaluation.
The direct consequence of the soaring offshore dollar is that it has widened the domestic and foreign exchange differences. The space of several hundred base points will undoubtedly make the cross-border arbitrageurs very excited, and the result of arbitrage is that the dollar on the shore will inevitably soar. It is not the first time that there is a space for cross-border arbitrage in the domestic foreign exchange difference of more than 100 basis points." Han Huishi said.
However, since this Tuesday, the exchange rate has begun to pull back, which may have the central bank's stable exchange rate "hit" the short position. Two interesting phenomena are meaningful: on the one hand, the central parity of the RMB against the US dollar was reported at 6.8365 on Tuesday, down by 411 points, significantly lower than Monday's closing at 6.8721, indicating that the countercyclical factor in the middle price pricing mechanism may be On the other hand, the offshore RMB-dollar exchange rate on Tuesday had a strong pull of 150 points in a short-term, once regaining the 6.90 mark.
The special timing of the central bank’s issuance of central bank bills in Hong Kong this Wednesday reflects the policy intention of stabilizing the exchange rate.
Then, does the central bank’s steady exchange rate at this time mean that the renminbi must be guaranteed “7”? Some analysts pointed out that when the central bank chooses to stabilize the exchange rate, it has nothing to do with the specific point of the exchange rate. The key is to observe the market's settlement and sale of foreign exchange.
"The exchange rate point is never the most important. The monetary authority first considers the pressure of capital flow. If the macro-prudential management of cross-border capital flows is effective, the settlement of foreign exchange settlement is not big, and it is not important whether it breaks 7 or not." Han Huishi said. If the market once again has a serious imbalance in the sale and purchase of foreign exchange, the invisible hand will move, even if the RMB is near 7 to the US dollar, if the settlement and sale market is calm, then the 7 break will be broken, not a big deal; but if the exchange rate When I first arrived at 6.95, there was a wave of foreign exchange purchases.
Enterprises should not gamble on unilateral devaluation and should insist on financial neutrality
In recent years, the RMB exchange rate has been characterized by “slowly rising and falling fast”, and event-driven exchange rate fluctuations have become the norm. An interesting phenomenon is that many companies and residents rarely consider the settlement of foreign exchange when the exchange rate rises, but when the exchange rate declines, they begin to think about whether to exchange foreign exchange, which is easy to fall into unilateral and linear thinking.
Guan Tao, director of the Economics of Wuhan University and former director of the International Payments Department of the State Administration of Foreign Exchange, said that the rapid adjustment of the RMB exchange rate in this round is obviously due to the rising risk aversion of the market caused by the sudden changes in foreign economic and trade consultations. In the future, it is very likely to talk about it. The short-term impact on China's foreign exchange market will be long-term intertwined and event-driven, that is, good news will be released in a while, the exchange rate will be stronger; and bad news will be weaker in a while. Then, if the market overreacts to some of the current twists and turns in China's foreign trade and economic situation, it is likely that it will be hit again.
Therefore, for enterprises and residents, the two-way fluctuations in the future exchange rate will continue to increase, and the exchange rate should not be unilaterally appreciated or depreciated. Guan Tao suggested that for the micro-subjects of the market, on the one hand, we should adhere to the financial neutral concept and manage the risk of currency exposure; on the other hand, we should carry out the currency of assets and liabilities based on economic fundamentals rather than short-term market fluctuations. At the mercy.
(Article source: brokerage China)