At the end of January, the RMB exchange rate handed over the "answer sheet" for the first month of the new year. According to data from China Money Network and Wind, on January 31, the central parity of RMB appreciated for two consecutive trading days, with a slight increase of 16 basis points in a single day. On the same day, the onshore and offshore RMB exchange rate against the US dollar was around 717 fluctuations.
On the whole, the RMB exchange rate against the US dollar fluctuated weakly in January, but the amplitude was still smaller than the exchange rate of the yen against the US dollar and the exchange rate of the euro against the US dollar. Some analysts pointed out that short-term fluctuations do not change the expectation of a rebound in the RMB exchange rate, and the RMB exchange rate may remain weak in the short term, but with the support of domestic economic recovery, the RMB exchange rate is expected to stabilize and rebound slightly.
The renminbi retreated slightly in January.
On January 31, the People's Bank of China authorized the China Foreign Exchange Trade System to announce that the central parity of the RMB exchange rate in the interbank foreign exchange market on January 31, 2024 is: 1 US dollar to 7 yuan1039 yuan, the middle price of the previous trading day was reported at 71055 yuan, a single-day increase of 16 basis points.
The central parity of the RMB has shown an appreciation trend for two consecutive trading days, and the overall price has been around 711 Fluctuations. According to the central price of RMB on the last trading day of 2023**7According to the calculation of 0827, the central parity of RMB in January has been reduced by 212 basis points.
The onshore and offshore RMB exchange rates also showed a slight depreciation trend during the month. Among them, the opening price of the onshore yuan is 71754, a slight increase of more than 10 basis points from the previous trading day's ** price, and the overall remained at 7 after the opening17—7.18 range-bound fluctuations; The CNH opened at 71875, after the opening of the overall around 719 volatility, intraday highest appreciation to 71838。
As of 17:45 on January 31, the onshore RMB exchange rate against the US dollar was 71762, with an intraday appreciation of 002%；The offshore yuan exchange rate against the US dollar is quoted at 71863, a slight rebound of 003%。Judging from the performance of the whole month, the onshore RMB exchange rate depreciated by 119%, the offshore RMB exchange rate depreciated by 086%。
A reporter from Beijing Business Daily further combed through past data and found that since November 2023, the RMB exchange rate against the US dollar has started a strong appreciation trend, and the onshore and offshore RMB exchange rates will return to 7 at the end of 2023 after recovering multiple thresholds1 above. The market's call for the RMB exchange rate to return to within "7" is high, and after entering 2024, the RMB exchange rate against the US dollar has failed to continue the appreciation trend of the previous two months, and the offshore RMB exchange rate has fallen to 723 below.
For the performance of the RMB, CITIC ** Chief Economist Ming Ming pointed out that since the beginning of the year, the overseas market's re-revision of the Fed's interest rate cut expectations has driven the US dollar index and the 10-year US Treasury yield, superimposed on the domestic market's weak expectations for domestic economic growth, low risk appetite in the domestic financial market and other factors, the RMB is weak and volatile.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, further explained that due to the strong and unexpected data on employment, consumption, and GDP released in the United States at the beginning of the year, the market adjusted the Fed's bet on a sharp interest rate cut in 2024, and the U.S. Treasury interest rate was **, and the US dollar **. However, on the whole, the fluctuation range of the RMB exchange rate against the US dollar is lower than that of the US dollar index and the euro exchange rate against the US dollar. At the same time, the exchange rate of the renminbi against a basket of currencies (CFETS) actually rose and appreciated in January.
According to wind data, as of 17:45 on January 31, the dollar index was at 1034929, with an intraday appreciation of 01%, up more than 2% in January. And on the back of a strong recovery in the dollar index, the euro depreciated by 1 against the dollar in January86%, and the depreciation of the yen against the US dollar reached 456%。According to data from China Money Network, as of January 26, the CFETS RMB exchange rate index was 9893, an increase of 017%。
The recovery is not expected.
It should be noted that although the RMB exchange rate as a whole showed a slight depreciation in January, affected by factors such as the policy shift of major overseas economies and the recovery of the domestic economy, the market generally believes that the appreciation of the RMB exchange rate during the year is a high probability event.
In terms of external factors, since the end of 2023, the interest rate hikes of many central banks, including the Federal Reserve, have pressed the pause button, and the cooling of inflation expectations in the United States will ease the external pressure on the RMB exchange rate. In terms of internal factors, according to the data previously released by the National Bureau of Statistics, after preliminary calculation, China's gross domestic product (GDP) in 2023 will be 1260582 billion yuan, an increase of 5 percent over the previous year at the same rate2%, the fundamentals are accelerating and are in a clear upward trend.
On the other hand, around the RMB exchange rate, the regulatory authorities have released positive signals several times, setting the tone of "stability" for the trend of the RMB exchange rate. On January 24, the press office held a press conference, and Pan Gongsheng, governor of the People's Bank of China, once again mentioned the topic of the RMB exchange rate. Pan Gongsheng said that in 2024, the RMB exchange rate will continue to remain basically stable at a reasonable equilibrium level. The People's Bank of China (PBoC) will maintain the flexibility of the RMB exchange rate and give full play to its functions as an automatic stabilizer of the exchange rate adjustment macroeconomy and the balance of payments. Insist that the exchange rate is mainly determined by the market, and at the same time adhere to the bottom-line thinking, enrich the response tools, and prevent the formation of unilateral consensus expectations and self-reinforcement.
For the next stage of the development of the RMB exchange rate, Zhou Maohua said that short-term fluctuations will not change the expectation of the RMB exchange rate to recover. The main reason is that the RMB exchange rate is facing a relatively favorable internal and external environment this year. It is mainly affected by the following factors: the steady recovery of the domestic economy, the resilience of foreign trade, the balance of payments is expected to remain basically balanced, and the RMB exchange rate is supported by solid fundamentals; Inflation and economic prospects in advanced economies are slowing down, the corresponding interest rate policies are gradually transitioning to the interest rate cut cycle, and the spillover impact of overseas policies on China will gradually weaken, and the US dollar space is actually constrained.
Ming Ming believes that in the short term, the RMB exchange rate may still remain weak and fluctuate under the condition of limited incremental information. In the medium to long term, the global liquidity crunch is expected to improve significantly as the United States enters a cycle of interest rate cuts. However, whether foreign capital can return to the Chinese market in a significant way, including the repair of direct investment accounts and ** investment accounts, may still depend on the degree and extent of the recovery of the domestic economy and the long-term economic growth expectations in the future. Under the neutral assumption that the domestic economy will continue to recover, domestic policies will maintain a certain intensity, the U.S. economy will gradually cool down, and the Federal Reserve will gradually start to cut interest rates, the RMB exchange rate is expected to stabilize and rebound slightly.
Beijing Business Daily reporter Liao Meng.