Oriental Fortune Network 2, the offshore RMB (CNH) against the US dollar at 04:59 Beijing time reported 6.9171 yuan, compared with 574 points in late New York on Wednesday, and successively recovered seven major points. Onshore RMB against the US dollar (CNY) closed at 6.9199 yuan at 23:30 Beijing time, up 576 points from the close of trading on Wednesday night; the daily trading volume was 36.573 billion US dollars, an increase of 7.648 billion US dollars compared with Wednesday.
The head of offshore foreign exchange trading of a foreign bank said, "On the one hand, the liquidity of the offshore market can be collected through the issuance of central bank bills. On the other hand, the interest rate of the central bank bill is too high, which will also cause disturbance to the market. The issue may still be cautious.” However, he also said that if the central bank vigorously issues central bank bills in the future, the offshore renminbi will inevitably rise. After all, compared with CNH HIBOR (offshore renminbi Hong Kong interbank offered rate), the central bank vote is offshore. Liquidity management is more effective and transparent.
Zhou Hao, senior economist at Emerging Markets of Commerzbank, said that the issuance of central bank bills shows the central bank’s determination to stabilize the RMB exchange rate
Lian Ping, chief economist of the Bank of Communications, said that the issuance of bills by the central bank in Hong Kong is extremely important, and the possibility of mediation using comprehensive tools in the next step is very high. The downside of the RMB exchange rate is limited, and the current position has approached the psychological price.
E-Zhong, chief economist of BOC Hong Kong, believes that the central bank’s move will include the offshore market into the RMB liquidity management system, providing a stable supply to the offshore market, balancing the offshore and onshore markets of the RMB and maintaining the RMB exchange rate. Expected to be basically stable.
Regarding a series of measures for the central bank to maintain the exchange rate, Sheng Songcheng, the Shanghai Municipal People's Government Counselor and the former director of the Survey and Statistics Department of the People's Bank of China, said that maintaining the RMB expectation is still the first priority in the near future. The drawbacks of the RMB depreciation may be greater than the imaginable benefits. .
In the last week of October, the renminbi broke through 6.96 and 6.97 points in a row, and repeatedly hit a new low since May 2008. Many people think that the exchange rate will break the 7.00 mark, and the nerves of the market become particularly sensitive.
But never imagined that on the first day of November, the yuan short was beaten. From 6.9805 to 6.9191, it jumped 600 points. It is estimated that many RMB shorts broke out on the 1st night.
RMB continues to recover 7 major barriers
In the morning of November 1, the local currency fell below 6.97, but continued to rise in the afternoon. At around 15:08 in the afternoon, the RMB on the shore rebounded more than 150 points in an hour.
The onshore RMB against the US dollar closed at 6.9496 on the 1st at 16:30 pm, up 238 basis points from the previous trading day, the biggest increase since August 27.
Late at night, the renminbi continued to rise against the US dollar on the shore, refreshing the day to 6.9199 yuan. After recovering the 6.94 mark at 8:20 am EDT, it regained the two points of 6.93 and 6.92. From Thursday to Thursday, the US stock market regained six passes.
Offshore renminbi recovered 6.92 points, and the intraday gains expanded to 560 points or 0.8%, and the daily high was 6.9183 yuan. After recovering the 6.94 mark at 8:20 am EDT, they successively recovered the two passes of 6.93 and 6.92.
At around 8:00 am Beijing time on Thursday, the offshore RMB once fell below 6.98, and then continued to rise. By the end of the afternoon, US stocks had successively recovered seven passes.
Traders said that although the RMB exchange rate is approaching the 7-point mark, the institutions are still tabooing the regulatory stability measures. In addition, the US mid-term elections still have variables, and the institutions are afraid to over-quote. According to the pricing mechanism, if the US dollar continues to be strong, the RMB breaks seven. Understandably, it should not cause a significant impact.
The rare big rally of the renminbi rose from 6.98 to 6.91, which eased the risk of breaking 7 in the short term. This will have a positive impact on Friday's market.
The fall in the dollar is also one of the reasons for the rise in the RMB
The US dollar is the benchmark currency for the global foreign exchange market. If the US dollar is weak, it is stronger than the US currency.
On November 1, the US dollar suddenly encountered crazy selling today, the lowest fell to 96.30, and the highest overnight high reached a 16-month high of 97.21.
In response to the dollar's plunge, some analysts said that the US dollar had a large amount of buying at the end of the month on Wednesday, and this situation has weakened in November, thus supporting the euro, the Australian dollar and the New Zealand dollar.
The marketwatch website said on Thursday (November 1) that the US mid-term elections have put downward pressure on the US dollar, but as the highest-yielding developed market currency, it cannot be ignored.
The ICE dollar index has risen 5.2% this year, stimulated by fiscal stimulus and spreads, with particularly strong performance in May and June.
Mazen Issa, strategist at TD Securities, said that the bullish factors that seemed to have begun to lose light.
He said it is difficult to determine what catalysts will continue to push the dollar, and the mid-term elections could be a turning point.
The central bank warned of empty hair a week in advance:We have handed over a few years ago and are very familiar with each other.
On October 26th, Pan Gongsheng, deputy governor of the People's Bank of China, talked about the five points of view on the renminbi:
Recently, "the depreciation of the renminbi is mainly due to the combination of the US dollar interest rate hike in the international financial market, the strengthening of the US dollar index, and international financial market disturbances."
“The performance of the renminbi in emerging market currencies is still generally stable.”
"In response to the procyclical behavior of the foreign exchange market, the (Central Bank) has and will continue to actively adopt macro-prudential policies and other measures to stabilize the foreign exchange market expectations."
China "will not engage in competitive devaluation."
The fundamentals of the Chinese economy are stable, the macro leverage ratio is basically stable, and the financial and financial risks are generally controllable, providing fundamental support for the RMB exchange rate to remain basically stable.
Pan Gongsheng said that China has rich experience and tools to deal with exchange rate fluctuations. At present, the impact of the foreign exchange market and cross-border capital flows is generally controllable. It has the ability and confidence to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. Then he made the following warning to the empty hair:
For those who are trying to short the renminbi, we have handed over a few years ago and are very familiar with each other. I think we should all remember it.
Regarding the expected action of the Chinese central bank to stabilize the market mentioned by Pan Gongsheng, the CSI reported that the industry believes that these measures may include: strengthening macro-prudential management of foreign exchange transactions and capital flows, and increasing the crackdown on foreign exchange violations.
The RMB exchange rate market is not calm recently
At the end of October, the waning situation of the renminbi restarted. The exchange rate of the RMB against the US dollar continued to fluctuate upwards, breaking through 6.96 and 6.97 points in a row.
On the 31st, the onshore RMB against the US dollar closed below the 6.97 yuan mark on Wednesday, which was 121 points lower than the official closing price of 6.9613 yuan on the previous trading day, a decrease of 0.17%. This closing price hit a new low since May 16, 2008. In October, it fell by 920 points, falling for seven months. Offshore renminbi also fell below 6.97.
HSBC officially showed that the bank’s latest US dollar and spot exchange prices on October 31st have reached 7.00958. In other words, if you go to HSBC to exchange dollars, it will cost 7.00958 yuan for a dollar.
On the morning of October 31, the central bank issued a notice saying that it will pass the Hong Kong Monetary Authority's Debt Instrument Central Clearing System (CMU) bond bidding platform on November 7 (Wednesday), and issue the first three-month period and the first issue of 2018. The second-phase one-year central bank bills have a circulation of 10 billion yuan.
This is the first time that the central bank issued a central bank bill in the offshore market. With the renminbi approaching the key “psychological position”, it has a strong signal meaning of stabilizing the foreign exchange market.
The central bank will issue 20 billion yuan of offshore central bank bills in Hong Kong next week
It’s harder to short the yuan
The big move that the market sees as stabilizing the offshore renminbi market is about to land. The central bank will issue a total of 20 billion yuan of offshore central bank bills in Hong Kong next week.
The People's Bank of China issued a notice on October 31 stating that in order to enrich Hong Kong's high-credit renminbi financial products and improve the renminbi yield curve in Hong Kong, the People's Bank of China and the Hong Kong Monetary Authority signed the "CBD" system for the distribution of Chinese people. Memorandum of Cooperation on Bank Notes, on November 7, 2018, the People's Bank of China will through the Hong Kong Monetary Authority's Debt Tools Central Clearing System (CMU) bond bidding platform to tender for the first and second central bank notes of 2018.
Among them, the first phase is a three-month (91-day) central bank bill, which is a fixed-rate interest-bearing bond with a circulation of RMB 10 billion. The second phase of the central bank bill has a longer term, which is a one-year central bank bill. Fixed-rate interest-bearing bonds are paid semi-annually, and the issuance is also RMB 10 billion.
This is the first time the central bank has gone to sea in three years, and it is also the second time in history that offshore banknotes have been issued.
The last time the central bank issued the central bank bill was still on June 20, 2013. This time, not only has the central bank issued the central bank bill for the first time in more than five years, but it is also the first time in history that the central bank bill has been issued in the offshore market.
The so-called central bank bills are the debt certificates issued by the central bank to regulate the excessive reserves of commercial banks. The essence is the bonds issued by the central bank and a monetary policy tool for the central bank to adjust the base currency.
How can I stabilize the RMB exchange rate when issuing RMB central bank tickets in Hong Kong?
First, interest rates and exchange rates are the "two sides" of money. According to the classical theory of interest rate parity, interest rates can determine changes in exchange rates. It is simple to understand that if the interest rate of the A currency in the currency pair does not change and the interest rate of the B currency rises, then the B currency tends to appreciate against the A currency.
Second, the central bank is the central bank's tool to regulate liquidity. The central bank’s issuance of central bank bills is liquidity, and the maturity of central bank bills is reflected in liquidity. Since the “water” in the “pool” of the offshore market is originally less than the onshore market, if the central bank issues a part of the “water”, the amount of water in the offshore “pool” will decrease and the interest rate will rise accordingly. . Whether it is to improve the short-selling financial costs, or from the perspective of increasing the attractiveness of the RMB spread, this is expected to provide some support for the offshore RMB exchange rate.
With the continuous opening of the mainland capital market, the RMB exchange rate linkage between the mainland and Hong Kong markets has increased, and the changes in the offshore RMB exchange rate will have an impact on the mainland RMB exchange rate.
Zhou Hao, a senior economist at the German commercial bank, believes that 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 the market to raise interest rates to some extent. .
At present, the liquidity of the offshore renminbi market is mainly determined by market supply and demand, but because the demand for renminbi is not stable, it has caused certain volatility in the market.
At the same time, the central bank's policy stance and transmission path are not clear, and the market can only judge the possible policy intentions behind it through some operations of the Chinese bank. If the central bank is used to regulate market liquidity, the market can judge the central bank's policy intentions through the issuance, expiration and renewal of the central bank bill, which can increase the transparency of the policy.
At the current time, considering the issuance of central bank bills, it also indicates to a certain extent that the central bank wants to maintain policy flexibility. Once the offshore market has a relatively 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, it will curb the renminbi short.
In general, the central bank issued central bank bills in the offshore renminbi market in Hong Kong, reflecting the central bank’s policy stance of maintaining the stability of the renminbi. At the time, it also indicates that the central bank intends to hedge the exchange rate between the US interest rate hike and shorting of the renminbi. fluctuation. From a more systematic point of view, the issuance of central bank bills also means that the central bank wants to transfer its monetary policy stance to the offshore market, which also indicates that the barbaric growth stage of the offshore market is gradually coming to an end.
The renminbi holding "7" is a high probability event
When the RMB exchange rate approaches the integer 7 in the heart, the market’s nerves become particularly sensitive.
Han Huishi, research director of CCB Financial Assets Investment Co., Ltd., said:
7 is just a common point. The RMB is not important to the US dollar, whether it is 6.99 or 7.01. However, excessive public opinion speculation, especially some malicious speculations that lack common sense but have a wide impact, make it necessary for the supervisory authority to break the renminbi after 7 The negative effects are precautions.
Because market sentiment is easy to self-reinforce, some malicious speculations are likely to cause strong psychological cues among the people, that is, the renminbi may depreciate further. Coupled with short-selling institutions to fish in troubled waters, it is easy to increase the pressure of capital flight.
The point is small, but the impact of speculation on market expectations and investor confidence is big.
According to the "Economic Information Daily", one of the key words of China's RMB exchange rate formation mechanism is "managed float", which means that while the foreign exchange market supply and demand determines the market exchange rate, the monetary authorities have a necessary time for the RMB to exceed the expected fluctuation risk. The "visible hand" will be used to regulate the market. This regulation is the meaning of the issue of China's exchange rate formation mechanism.
At the regular press conference of the State Council held recently, Pan Gongsheng, deputy governor of the central bank and director of the State Administration of Foreign Exchange, made it clear that "in recent years, the People's Bank of China and the foreign exchange bureau have accumulated in the process of dealing with exchange rate and foreign exchange market fluctuations. A wealth of experience and policy tools to take necessary and targeted measures based on changes in the situation."
Two important data released recently are worthy of attention. First, the balance of foreign exchange holdings of the central bank in September fell by 119.4 billion yuan from the end of August. Second, the balance of the central bank's foreign exchange reserves fell by 22.7 billion US dollars in September.
Taking into account various factors, the changes in these two data indicate that the pressure on cross-border capital outflows is increasing. On the other hand, it also implies that the monetary authorities have already intervened in the foreign exchange market in the context of the volatility of the RMB exchange rate. In fact, for a long time in the past, the central bank has basically withdrawn from the normalized foreign exchange market intervention, and the current re-entry into the market can be seen as the monetary authorities stabilize the market when the renminbi has irrational unilateral depreciation expectations. Strength and determination. As Pan Gongsheng said, "We have the foundation, ability and confidence to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level."
The measures of the monetary authorities and the regulatory authorities do not stop there.
On August 3, the central bank adjusted the foreign exchange risk reserve ratio of the forward sales business from 0 to 20% to curb the demand for speculative foreign exchange purchases.
On August 24th, the secretariat of the foreign exchange market self-regulatory mechanism also issued a statement saying that the RMB against the US dollar mid-price quote line restarted the “counter-cyclic factor” to moderately hedge the procyclical sentiment in the direction of depreciation.
On September 20, the People's Bank of China and the Hong Kong Special Administrative Region 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 central bank bills by the People's Bank of China in Hong Kong. It will help the central bank adjust the offshore renminbi liquidity by issuing central bank bills. It can be expected that the regulatory tone of the macro-prudential management of cross-border capital flows by regulators and the counter-cyclical mediation of short-term fluctuations in the foreign exchange market will not change.
Therefore, under the stance and even action of the monetary authorities' "steady expectations", the RMB exchange rate continued to fall sharply, and the possibility of panic in the market was not large.
Hong Wei, managing director of Bank of Communications International, believes that although the RMB exchange rate has been under pressure recently, a series of important speeches and measures have stabilized the stock market. The exchange rate is similar, and 7 should be the short-term policy bottom line.
The chief fixed income analyst of CITIC Securities clearly stated that the issuance of offshore central bank bills can effectively manage exchange rate movements. From the point of view of the difference between offshore and onshore renminbi, the offshore renminbi exchange rate in late August is stronger than the onshore renminbi exchange rate. The central bank mainly uses the various exchange rate instruments to effectively communicate the exchange rate signal to the market, and the sensitivity of the offshore renminbi exchange rate. The sex is higher, so the offshore RMB exchange rate is stronger. With the resumption of the countercyclical factor by the central bank on August 24, the central parity of the renminbi against the US dollar was also significantly stronger, driving the onshore renminbi exchange rate stronger than the offshore renminbi exchange rate. Since the countercyclical factor mainly affects the onshore exchange rate, the central bank will further strengthen the impact on the offshore RMB exchange rate through offshore central bank bills.
Xie Yaxuan, director of macro research at China Merchants Securities, said that under the background of the Fed’s interest rate hike cycle, the stability of exchange rate demand has significantly weakened the monetary policy constraints, and the Sino-US spread has narrowed to a lower level. If the exchange rate fluctuates significantly, it is obviously not conducive to the domestic economy. As well as the stability of the capital market, it is reasonable for the central bank to directly intervene in the stable foreign exchange market. (Source: China Fund News)
The trading day is a sense of accomplishment.