The RMB suddenly soared more than 600 points

The People’s Bank of China and the State Administration of Foreign Exchange have decided to extend the trading hours of the interbank foreign exchange market to 3:00 the next day from January 3, 2023, covering more trading hours in Asian, European and North American markets. This will help expand the depth and breadth of the domestic foreign exchange market, promote the coordinated development of onshore and offshore foreign exchange markets, provide more convenience for global investors, and further enhance the attractiveness of RMB assets. The China Foreign Exchange Trade System issued an announcement on December 30 to adjust the currency basket weights of the CFETS RMB exchange rate index and the SDR currency basket RMB exchange rate index starting from January 1, 2023. On the same day, both the onshore renminbi and the offshore renminbi rose by more than 600 points. | Related reading (Daily Economic News)

Resiyne

The renminbi, which has been depreciating in the past few months, suddenly seems to have entered the appreciation range, and it has risen by 600 points all of a sudden. We have not seen such a situation for a long time. However, the reason behind it is obvious. The continuous depreciation of the renminbi in the past few months is nothing more than two reasons. International investors are pessimistic about the future of RMB assets. Now that the Federal Reserve has released a signal to slow down interest rate hikes, the depreciation pressure on the renminbi has been reduced, and the resumption of international customs clearance also means that the domestic economy is moving towards normalization, and the exchange rate will naturally fluctuate with this trend.

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