Recently, the RMB exchange rate against the US dollar has once again broken through an important threshold, showing a trend of continuous appreciation. At the same time, the offshore renminbi also strengthened against the US dollar, reaching a new high in recent times. Behind this appreciation, in addition to the impact of external factors, such as the pause in interest rate hikes by the US dollar and the release of the Federal Reserve's first signal, more important is the market's expectation of the return of foreign capital. This trend means that the renminbi itself is facing the pressure of appreciation, and the repatriation of foreign capital will further strengthen this pressure and promote the continued appreciation of the renminbi. The changes in the scale of the funds in the north of China for two consecutive days can also be glimpsed.
The market expects foreign capital to return in a big way after the US dollar enters the interest rate cut cycle in 2024, which has also become an implicit factor behind the appreciation of the RMB. With the entry of US dollar capital, RMB assets will usher in large-scale** opportunities, thereby promoting further appreciation of the RMB. It is worth noting that the return of foreign capital is not only an impact on **, but also a rebound in inflation. Global investment institutions generally ** US dollar will start to cut interest rates in the middle of next year, which also creates a more favorable environment for foreign capital to return.
Although US dollar capital has been singing short about China's economy and constantly smashing the property market and **, this is just their short-term speculation, in order to better short the market and achieve larger-scale arbitrage. This year, when the US dollar capital withdrew, some analysts believed that their withdrawal was to smash the market, but also to better come back, after the US dollar entered the interest rate cut cycle, the first RMB assets. This logic can be deduced that if the dollar enters a cycle of interest rate cuts, cheap dollars will flock to the world in search of low-priced assets, and China, as one of the most economically dynamic countries, has naturally become the focus of foreign investment. Therefore, the appreciation of the renminbi is not only the expected result of the market, but also the inevitable trend of foreign capital layout.
In addition to the expectation of foreign capital return, the appreciation of the RMB is also affected by the Fed's ** policy. Recently, the Federal Reserve released a signal to pause interest rate hikes, which made the RMB directly respond to the US dollar exchange rate. This has also become a direct positive factor for the appreciation of the renminbi. However, it should be noted that the appreciation of the renminbi is affected by a combination of factors, not only the alleviation of short-term negative factors, but also the result of long-term bullishness on China's economy and Chinese assets.
The appreciation of the renminbi is both an opportunity and a challenge for the Chinese economy and Chinese assets. On the one hand, the appreciation of the renminbi will strengthen the attractiveness of Chinese assets, attract more foreign capital into the Chinese market, and promote the development of China's capital market. On the other hand, the appreciation of the renminbi may bring the risk of inflation, which will have a certain impact on the purchasing power of domestic residents and the cost of enterprises. Therefore, it is necessary to take corresponding regulatory measures to balance the impact of RMB appreciation on the economy.
To sum up, it is difficult for the RMB to appreciate, and breaking 7 is just around the corner, and this time it is not the dollar capital that is deceiving people. In addition to the impact of short-term positive factors, the appreciation of the renminbi continues to rise, and more importantly, the market's expectation of foreign capital repatriation. The repatriation of foreign capital will promote further appreciation of the renminbi and bring a series of opportunities and challenges. In the face of this trend, China** should remain vigilant and take appropriate measures to guide capital inflows, while strengthening supervision and guarding against financial risks. Only in this way can the appreciation of the renminbi become a booster for China's economic development and inject new vitality into China's capital market.