RMB exchange rate rises above “7”

It rebounded rapidly in November and regained the 7 yuan mark in early December. The “action” of the RMB exchange rate can be described as very fast. On the morning of December 5, both the onshore and offshore renminbi exchange rates against the U.S. dollar rose above 7 yuan. On September 15 and 16 this year, the exchange rate of offshore RMB and onshore RMB against the US dollar fell below the “7” mark successively, and has been falling all the way since then. Industry insiders said that under the impetus of gradually improving economic expectations and the addition of seasonal foreign exchange settlement factors, it may be difficult for the spot exchange rate of RMB against the US dollar to break through the previous low. | Related reading (China Securities Journal)

Dong Yuanyuan

The USD/CNY exchange rate at the China Foreign Exchange Trading Center has been falling since reaching a high of 7.3200 on November 3, and this high is historically significant because it is arguably the highest since 2008, and now China’s economy is completely different from that of 2008, both in terms of size and structure. With the substantive relaxation of China’s epidemic control, the hearts of those who are suspending the market have finally calmed down. It can be said that the expectation of RMB depreciation has no market basis.

2023 is currently predicted to be a year of comprehensive economic recovery. The low base in 2022 and the relaxation of epidemic control in 2023 make the industry generally predict that China’s GDP will grow by more than 4.5% or even reach a high of 5% in 2023. And in September this year, the central bank once warned the market, “Don’t bet on the unilateral appreciation or depreciation of the RMB exchange rate, and you will lose if you gamble for a long time.” Now it seems that there is some truth.

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