Strongly returning to the “6” era, where does the RMB come from?

Since last Monday, the exchange rate of the RMB against the US dollar has gone through a wave of steep gains, and it once rose by more than 1,000 points yesterday. Since November, in just one month or so, the exchange rate of RMB against the US dollar has risen from a minimum of 7.32 to about 6.95 at present, with a fluctuation range as high as 5%, which is rare in recent years. Wen Bin, Chief Economist of Minsheng Bank, said, “As the pace of external Fed rate hikes slows down and positive progress is made in internally coordinating epidemic prevention and control and economic and social development, the volatility of the RMB in the market outlook is expected to moderate.” | Related Reading (China) news site)

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The substantive relaxation of the epidemic situation in China has brought about a promising growth prospect, and the US interest rate hike is not expected to be strong. These are the two major factors for the appreciation of the renminbi.

But the appreciation may not last forever, and hovering at a high level may be a high probability event. After all, the current interest rate in the United States is already very high, while China is still easing. This difference in interest rates has given great resistance to the appreciation of the renminbi.

In addition, no one can guarantee what the result will be after China’s epidemic control is relaxed. It must be a good expectation. The carnival in the market these days is more of a correction to the long-term depression in the past. If China’s opening up next year leads to a higher number of deaths, it is not impossible for the policy to return to tightening again, so it will take a while to observe.

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