On Friday (May 11), the central parity of the RMB against the US dollar was 6.3524, a sharp increase of 244 basis points from the previous day. The mid-price ended four days and fell, rising to the highest since May 4, 2018, the largest increase since March 27, 2018. On the previous trading day, the central parity of the RMB against the US dollar was reported at 6.3768, the official closing at 16:30 was 6.3613, and the closing at 23:30 was reported at 6.3460.
Analysts pointed out that the US dollar index fell sharply overnight and helped the RMB exchange rate rebound. At present, neither the fundamentals nor the market behavior support the sharp depreciation of the renminbi. Overall, the overall pattern of stable and two-way volatility of the renminbi is expected to continue.
In the international currency market, the US dollar fell against a basket of currencies on Thursday, off the peak of 2018, as US consumer prices rose less than expected in April, prompting traders to lower their inflationary acceleration, which may prompt the Fed to accelerate the rate hike. The US dollar index fell 0.4% to 92.68. The euro rose 0.6% against the dollar to $1.1920. GBP/USD fell 0.2% to $1.3516, and after the Bank of England announced its policy statement, it fell to a minimum of $1.3460 on January 11.
Many insiders pointed out that the US dollar index has been rising in recent weeks and has risen nearly 5% since mid-April. However, as yesterday's inflation data released a weak signal, investors may need to be careful that the dollar's rally has gradually come to the end of "strong"
Nomura believes that from the 14th RSI indicator, the current US dollar against the multiple currencies are overbought. "In the US dollar against the developed countries' currencies and emerging market currencies, about 70% of the current 14-day RSI is higher than 70, in the super Buying level. This has only happened three times in the past few years - November 2016, May 2016 and March 2015. In all three cases, the US dollar has a callback, in the next 2-3 In the middle of the month, the dollar was adjusted back by about 4%-6%."
From the perspective of the trend of the renminbi, in this round of large-scale fluctuations in the foreign exchange market, the depreciation of the renminbi against the US dollar is significantly smaller than the increase in the US dollar index, indicating that the renminbi exchange rate has considerable resilience in the context of a stable economic situation. Looking back, the two-way volatility of the renminbi with the US dollar will continue for some time, but the space for the dollar to continue rising remains to be seen, and the endogenous stability of China's economic growth also determines that the renminbi exchange rate will remain stable.
A Reuters survey released on Thursday showed that the yuan is expected to change only slightly in the coming months, as China is expected to continue to closely control the renminbi until the US-China trade friction deteriorates.
According to a survey of more than 60 foreign exchange analysts by Reuters, the yuan is expected to remain at 6.37 after three months against the US dollar, and is expected to be 6.36 a year later. The survey was conducted from May to September.
“As the dollar rises, the renminbi is unlikely to be unaffected. But we expect the USD/RMB to continue to fluctuate within the short-term under US-China trade tensions,†said Irene Cheung, Asia strategist at ANZ.
Chinese officials are expected to conduct a second round of negotiations with US officials in Washington next week. In the negotiations in Beijing last week, the US made a series of tough demands. “The weak but persistent upward trend in the US dollar/RMB middle price and the RRR cut indicate that China will remain cautious before trade disputes are resolved,†Cheung added.
A Reuters survey of another currency position last week showed that the previous two-week renminbi fell to its lowest level since October. However, the investigation did not expect the renminbi to depreciate significantly. Most strategists expect the renminbi to appreciate, and two of the respondents expect the renminbi to appreciate significantly against the dollar to 6.0 yuan or less. Since the Chinese double exchange rate system was merged in January 1994 and the RMB has been depreciated by 33% at one time, the exchange rate of the US dollar against the RMB has been higher than 6.
(Editor: Wang Zhiqiang HF013)
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