RMB to USD price keeping increasing

The central parity of the renminbi against the US dollar rose by 172 basis points to 6.3858, compared to the central parity of 6.4030 on the previous trading day.

On May 28, the central parity of RMB against the U.S. dollar rose by 172 basis points to 6.3858, which was 6.4030 in the previous trading day.

On May 27, the seventh working conference of the national foreign exchange market self-discipline mechanism was held in Beijing. The meeting emphasized that both enterprises and financial institutions should actively adapt to the state of two-way fluctuations in exchange rates. Enterprises should focus on their main business, establish a "risk-neutral" concept, avoid deviating from risk-neutral "foreign exchange" behavior, and do not bet on the appreciation or devaluation of the RMB exchange rate. Long-term bets will lose. Not only can financial institutions not help companies "speculate foreign exchange", they should not "speculate foreign exchange" themselves. Otherwise, it is not conducive to the steady operation of banks and will cause exchange rate fluctuations. The foreign exchange self-discipline mechanism must be unremitting, continue to guide enterprises and financial institutions to establish a "risk-neutral" concept, system escort, focus on practical results, and promote the healthy development of the real economy.

It is worth mentioning that this is the second time the central bank has signaled to the market on the RMB exchange rate issue in five days.

In a reporter’s question on May 23, Liu Guoqiang said when talking about the current exchange rate situation, “Since the beginning of this year, the RMB exchange rate has risen and depreciated, floating in both directions, and has remained basically stable at a reasonable and equilibrium level. At present, my country’s foreign exchange market has remained stable. Independent balance, the RMB exchange rate is determined by the market, and the exchange rate is expected to be stable. The future trend of the RMB exchange rate will continue to depend on market supply and demand and changes in the international financial market, and two-way fluctuations have become the norm."

Since late February, the exchange rate of the RMB against the US dollar has declined first and then rose, out of the classic "V" shape, while the US dollar index (90.0693, 0.0565, 0.06%) has shown a standard "inverted V" shape. The two run in opposite directions. The rhythm is very consistent.

The U.S. dollar index currently fluctuates around 90, which has fallen by nearly 3% since the beginning of April. However, the rate of increase in the exchange rate of RMB against the U.S. dollar during the same period was weaker than the decline of the U.S. dollar index.

Joe Perry, a senior analyst at Jiasheng Group, said that the recent weakness of the US dollar is a reasonable correction. The Fed's attitude on whether to adjust monetary policy is still relatively vague. This has led to the weakening of the US dollar, and the momentum of the US dollar is not even as good as the ruble. While the Rencoin has appreciated against the U.S. dollar, the Rencoin has actually weakened against the euro (1.2185, -0.0008, -0.07%), the British pound (1.4191, -0.0009, -0.06%), and the Canadian dollar since March of this year. Non-strength, the performance of a basket of currencies is not very strong, which seems to explain the recent "calm" attitude of the People's Bank of China. "We found that since this week, the central parity of the renminbi has basically been consistent with our model predictions, which shows the attitude of the People's Bank of China to let go of the market."

Speaking of the future trend of the RMB, Tang Jianwei, the chief researcher of the Financial Research Center of the Bank of Communications, said that the RMB exchange rate is determined by China's economic fundamentals, but it is directly reflected in the strength of the US dollar. Tang Jianwei predicts that the probability of the RMB exchange rate against the US dollar rising above 6 or falling below 7 in 2021 is very small, and is expected to remain in the 6.3 to 6.7 fluctuation range. The annual exchange rate appreciation is expected to be significantly smaller than in 2020.