The appreciation of the renminbi once again broke through an important threshold, breaking 7 is just around the corner, which has attracted widespread attention in the market. Despite the recent downplay of the Chinese economy by dollar capital, they usually do not deceive when it comes to making money. This time, they smashed the market in order to better take over the arbitrage and prepare for the future capital entry. According to the China Foreign Exchange Trade System, the central parity of the yuan against the US dollar was 7 on December 15**70957, 133 basis points from the previous day. At the same time, the offshore RMB exchange rate against the US dollar has also risen above multiple thresholds in a row, reaching a maximum of 70977, which is basically synchronized with the onshore RMB. This is the first time since June 2023 that it has broken through 710 important passes. Analysts believe that this is the most direct response of the RMB to the US dollar exchange rate after the Federal Reserve released the first signal, and the cumulative appreciation in the past two trading days has reached 118%。Therefore, the important positive factors for the appreciation of the RMB are the pause in interest rate hikes by the US dollar and the release of the Fed's ** signal.
The appreciation of the renminbi is not only affected by the US dollar policy, but more importantly, the value carried by the renminbi itself. As a currency, the value of the renminbi is based on the Chinese economy and Chinese assets. The market's optimism about China's economic prospects and the value of Chinese assets are important factors in the strength of the renminbi. Although these factors are long-term, it does not mean that the current market is also bullish, and there are more hidden but important factors in the current positive factors in addition to the pause in interest rate hikes in the US dollar and the Fed** signal.
A hidden factor is the market's expectation of foreign capital repatriation, especially after the US dollar enters the interest rate cut cycle in 2024, US dollar capital is expected to enter the Chinese market in a big way. As a result, some institutions began to lay out in advance. In recent days, the ** trading volume has increased significantly, and northbound funds have risen to a larger trading volume for two consecutive days. Although northbound funds were in a state of net outflow on December 15, there were still more than 1,000 **net**, indicating that the market is undergoing a large-scale adjustment. Fluctuations are only superficial, and there may be more far-reaching movements behind them. The appreciation of the renminbi has increased the demand for the renminbi, **naturally**, which could be a sign that someone is hoarding renminbi capital in advance. U.S. dollar capital institutions Goldman Sachs and Moody's have recently made frequent false statements, which indicates that they are continuing to suppress RMB assets. However, once it comes to making money from real operations, these agencies become very honest. At the time of the withdrawal of dollar capital, it was pointed out that their purpose was to better return to the Chinese market and bring in a larger scale of dollar capital, **renminbi assets. As the dollar will enter a cycle of interest rate cuts, massively low-priced dollars will look for cheap assets around the world, and China, as one of the most dynamic economies in the world, has an abundance of high-quality assets. Therefore, the large-scale influx of US dollar capital into the Chinese market is an inevitable trend and will cause a storm, which will not only affect RMB assets, but also bring inflation and other problems.
There are concerns about whether the United States** will allow a massive inflow of dollar capital into China. In fact, the U.S. tends to encourage capital on a global scale, which is an important target in the dollar tide. In addition, the United States** also cannot fully control the direction of capital flows, and once capital sees profits, it is difficult to be controlled. Historically, the United States has undergone many shifts in austerity and easing, and so-called politics is meant to serve interests, which is likely to change in the future. Therefore, in 2024, an even more intense battle will come.
The appreciation of the renminbi is an important phenomenon in the current economic situation. Although US dollar capital is singing about the decline of China's economy, it is actually preparing for better access to the Chinese market. Behind the appreciation, there are not only factors such as US dollar policy and market expectations, but more importantly, the value of China's economy and Chinese assets. With the expectation of foreign capital returning and the US dollar entering a cycle of interest rate cuts, the Chinese market will usher in a larger influx of capital. This will lead to the appreciation of RMB assets, but it may also lead to problems such as inflation. However, there are also uncertainties about US dollar capital inflows, including policy changes in the United States** and uncontrollable capital flows. The competition will be more fierce in the future, and we need to keep a clear head and a keen eye to make decisions that are beneficial to our own interests.