Since the beginning of this week, the offshore yuan exchange rate has increased from 716 rose to 711, an increase of up to 500 basis points. After a week of sideways, the renminbi started a second wave of appreciation.
The first wave of appreciation of the renminbi began in early November, from 734 rose directly to 717, an increase of 1700 basis points. Behind this, it is mainly driven by two US economic data.
One is that the unemployment rate in the United States has unexpectedly soared, reaching 39%, a new high since the end of the epidemic. The other is the CPI in the United States, which is only 3%, a two-year low.
This means that, on the one hand, the US economy may be facing problems, and on the other hand, inflation in the US is under control and is getting closer to the Fed's goal.
Now, the market has thought that the Fed's current rate hike cycle is over, so it has brought a heavy fall in the dollar and the first wave of appreciation of the yuan.
And this second wave of appreciation is more of an emotional push. In fact, the monetary policy in the United States has not been as loose as imagined recently, and on Tuesday night, a member of the Federal Reserve made hawkish remarks, arguing that inflation may continue and that it is necessary to raise interest rates. The other believes that the Fed does not need to raise interest rates.
However, the market did not believe in the hawkish remarks at all, and ignored such remarks, and as soon as the remarks came out, the dollar immediately fell sharply, continuing to push the yuan by 500 basis points.
Many people are asking what is the target for this round of RMB appreciation. I think it should break 7 and go back to 6-7. And this is also an equilibrium exchange rate that combines various factors. After all, according to the global purchasing power rating, 1 US dollar is roughly equivalent to the purchasing power of 3 yuan.