Under the background of the currency cycle differentiation between China and the United States, the US dollar raised interest rates and the RMB cut interest rates, the RMB exchange rate is experiencing unprecedented ups and downs in the past two years. So today, Bian Xiao is here to sort out the impact of RMB exchange rate breaking 7. Let's have a look!
Exchange rate fluctuation: the change of traders' preferences
On August 15, after the central bank lowered the MLF (medium-term lending facility) interest rate, the exchange rate of RMB against the US dollar fell rapidly. On that day, the offshore RMB once fell by nearly 700 points, approaching the 6.82 mark, the biggest decline since March 2020. On August 22nd, after the LPR was lowered, the RMB further depreciated.
This momentum is not over yet. On August 29th, the exchange rates of onshore RMB and offshore RMB against the US dollar respectively fell below the 6.92 mark, the lowest in the past two years. As of September 1, the exchange rates of onshore RMB and offshore RMB against the US dollar were reported at 6.9055 and 6.9 139, respectively, which were about 8.5% and 8.2% lower than those in mid-April.
Behind the continued depreciation of the RMB is the continued strength of the US dollar index. On September 1 day, the US dollar index rose to the highest point since mid-July this year, reaching 108.9900.
The recent devaluation of RMB is largely passive devaluation. From the perspective of international factors, the continued strength of the US dollar is closely related to the Fed's interest rate hike cycle and the return of funds to the US market.
Since March, the Federal Reserve has raised interest rates by 225 basis points. On July 27th, the Federal Reserve raised interest rates for the fourth time in a row and 75 basis points for the second time. According to the data of the US Treasury Department, in the first half of this year, the net inflow of US capital reached 81200 million US dollars.
Inflation and employment are the two most important goals of the Federal Reserve's monetary policy. According to Yuan Tao, senior foreign exchange analyst of Zhengdong Futures Company, the reason why Powell doesn't want to firmly adopt hawkish monetary policy is that allowing inflation to recur will bring more profound harm to the US economy and financial market than raising interest rates. The current inflation in the United States is at a 40-year high, the core inflation remains high, and the unemployment rate is at a low level for half a century. The unemployment rate data provided Powell with confidence to keep raising interest rates.
According to the data of the US Department of Labor, from May to July, the US consumer price index (CPI) rose by 8.6%, 9. 1% and 8.5% respectively after seasonal adjustment. In terms of breakdown, in view of the rising rent and service prices, after excluding food and energy prices, the core CPI rose by 5.9% in July.
Interest rate goes down: bond market leverage goes up.
During the ups and downs of the exchange rate, the interest rate of RMB funds also fell twice.
According to the calculation of CITIC Securities, since April, under the background that the central bank lowered RRR by 25 basis points, guided the deposit interest rate to cut interest rates, and carried out various types of refinancing, the interest rate of RMB funds dropped significantly for the first time in the year.
From March 3 1 to April 29, the center of overnight and 7-day capital interest rate dropped by about 40 basis points from 1.78% and 2.03% to around 1.35% and 1.67%. From the beginning of July to the beginning of August, the peak of special bond issuance in June has passed, and the market capital interest rate has dropped twice.
The data shows that from July 4th to August 4th, the overnight and 7-day capital interest rate centers went down from 1.35% and 1.70% to 1.07% and 1.4 1%, respectively, with a downward range of nearly 30 basis points.
According to the data of China Monetary Network, at the beginning of August, the weighted average interest rate of DR007 was as low as 1.29%, which was significantly lower than that of OMO2. 1%, and the spread between them reached 8 1 basis point.
According to the financial statistics in July, the social financing in that month increased by 756 1 billion yuan, which was lower than the market expectation of10.4 trillion yuan, and decreased by 310.91billion yuan year-on-year. The monthly social financing increase reached a new low after July of 20 16. In July, RMB loans increased by 679 billion yuan, which was lower than the market expectation of 1. 1 trillion yuan, a year-on-year decrease of 40 1 billion yuan, which became the main drag on social financing in that month.
The low interest rate of funds has ignited the enthusiasm of adding leverage to the bond market. 5 trillion, 6 trillion, 7 trillion ... Since April, the volume of pledged repo transactions between banks has continuously broken new highs in the year.
"Under the low interest rate of funds, the leverage of the bond market continues to rise, and the phenomenon that funds are divorced from reality needs attention." The chief economist of CITIC Securities clearly reminded that while the accumulation of liquidity in the financial system occupies physical credit resources, high leverage also poses potential risks to the stability of the financial system itself.
The interest rate of market funds has also begun to fluctuate upward. Taking the pledged repo (DR) interest rate of depository institutions as an example, the overnight (DR00 1) and seven-day (DR007) interest rates before the interest rate cut fluctuated slightly around 1.04% and 1.30%, and the interest rate of funds rebounded after the interest rate cut, reaching 655433 by August.
Double-rate pressure: entity demand needs to be improved
While major economies in the world are raising interest rates one after another, the downward trend of RMB exchange rate and interest rate also reflects that the single influence of China's monetary policy is both obvious and helpless.
The recent PMI (Purchasing Managers Index) data shows that the current domestic economic fundamentals still need to be improved. According to the data of the National Bureau of Statistics, the manufacturing PMI in August was 49.4%, which was lower than the threshold (50%) and 0.4 percentage points higher than that of the previous month, and the manufacturing boom level rebounded. Zhou, a macro researcher in the financial market department of China Everbright Bank, analyzed that the manufacturing PMI index improved marginally in August, and the PMI index and most sub-indicators were below the dry line, reflecting that the overall recovery momentum at both ends of domestic supply and demand was still weak.
Earlier, a number of economic data in July fell more than expected. In July, the manufacturing PMI was 49.0%, down 1.2 percentage points from the previous month, below the threshold. In terms of production, the added value of industrial enterprises above designated size increased by 3.8% year-on-year in July, down 0. 1 percentage point from last month. In terms of consumption, the total retail sales of consumer goods in July increased by 2.7% year-on-year, down 0.4 percentage points from the previous month; In terms of investment, investment in fixed assets in July increased by 3.6% year-on-year, down 2.2 percentage points from the previous month; In terms of price, excluding food and energy prices, the core CPI in July was only 0.8%, and the growth rate dropped by 0.2 percentage points from last month.
In July, RMB loans increased by 679 billion yuan, which was lower than the market expectation of 1. 1 trillion yuan, a year-on-year decrease of 40 1 billion yuan. According to the calculation of CICC, the medium and long-term loans of residents, enterprises and short-term loans decreased by 248.8 billion yuan, 654.38+0478 billion yuan and 96.9 billion yuan respectively in July, which was the main drag on the slight increase of RMB loans in that month. It reflects that under the risk environment of the real estate market, the demand for housing purchase by residents is declining, and the demand for financing by enterprises is weak.
At the same time, the money supply maintained a rapid growth in July, with the year-on-year growth rate of M2 (broad money) reaching 12%, the highest since May 20 16. CICC believes that if the gap between social financing and M2 is understood as the gap between financing demand and money supply, the gap in July reached 1.3 percentage points, which was at a historical high (2006 -2022).
Basically, the economy is crucial for stabilizing capital flows and the RMB exchange rate. China's capital flow is highly correlated with PMI, and the correlation coefficient is higher than the spread and the US dollar index. Both lowering interest rates and fiscal expansion can significantly improve China's economic prosperity and support the RMB exchange rate.
Credit expansion: banks make countercyclical efforts
Take consumer loans as an example. In the first half of the year, the interest rate of consumer credit provided by state-owned banks, joint-stock banks, city commercial banks and other commercial banks to high-quality customers has entered the prefix of "3". The annualized interest rate of time-limited preferential products launched by a state-owned bank is as low as 3.53%, which is lower than the one-year LPR interest rate.
In 20021year, new loans accounted for nearly 45% of the national total. In the first half of 2022, state-owned banks generally increased credit supply. According to the data in the interim reports of six major banks, ICBC, Agricultural Bank of China, Bank of China and China Construction Bank all increased RMB loans by more than one trillion yuan in the first half of the year. The scale of new RMB loans of Postal Savings Bank and Bank of Communications both exceeded 500 billion yuan. Among them, ICBC and Bank of China increased domestic RMB loans, while new loans of Agricultural Bank of China and Postal Savings Bank all reached record highs.
In terms of credit investment, infrastructure industry, manufacturing, green development, inclusive finance, rural revitalization and other key areas of the real economy have become the main investment. In the second half of the credit plan, increasing credit supply is still the top priority of major banks.
Central Bank Supervision: Enhancing Exchange Rate Flexibility
The development of economic fundamentals is crucial, and China's monetary policy is also facing new choices.
From the international background, major global central banks such as Europe and the United States have successively raised interest rates, and the spread between China and the United States has gradually widened, which is squeezing China's monetary policy space. If the environment of wide currency and wide credit is still maintained, although it will be beneficial to exports to a certain extent, it will also increase the pressure on the RMB exchange rate to further decline. In the context of high dollar, this will increase the import cost of goods denominated in dollars, or bring imported inflation. At the same time, it will also increase the cost of servicing foreign debt. If we change the environment of wide money and wide credit, it will bring pressure to real estate, infrastructure and other industries.
So far, the Bank of China has not obviously intervened in the market. However, some institutions have found that the central bank is indirectly influencing the exchange rate market by strengthening the control of the central parity of the RMB.
According to the data of China Foreign Exchange Trading Center, the central parity of RMB exchange rate was reported as 6.8698, 6.8802, 6.8906-3 1 on August 29th. According to the calculation of CICC, the central parity of RMB in the last four trading days was stronger than the market forecast by about 120, 56, 96 and 249 points respectively. According to market estimates, as of 3 1, the central bank has set the central parity of RMB stronger than market expectations within six trading days.
The central parity of RMB refers to the central parity of RMB against USD and other major foreign exchange currencies calculated and published daily by the trading center under the authorization of the People's Bank of China. The daily RMB exchange rate can only fluctuate between the central parity of RMB 2%.
In addition, the regulatory authorities have also strengthened the management of foreign debts. On August 26th, the National Development and Reform Commission published the draft for comments on its website. Borrowers, such as finance companies, need to register, declare and obtain the approval of the National Development and Reform Commission if they issue overseas debts with a term of more than 1 year. Previously, borrowers only needed to register their overseas bond issuance plans with the National Development and Reform Commission.
Safe said that China's foreign exchange market has always shown great resilience. The trade in goods showed a high surplus, and the actual utilization of foreign capital maintained growth, which continued to play a fundamental role in stabilizing cross-border capital flows and the foreign exchange market. At the same time, since August, foreign investors have generally bought CITIC Jiantou in the form of net purchase. Choice data shows that after the net outflow from the A-share market in July, northbound funds flowed into the A-share market slightly in August, amounting to 1, 276,543.8+0.3 billion yuan, reflecting the long-term investment value of RMB assets.
What is the impact of RMB exchange rate breaking 7?
★ Does the two-way fluctuation of RMB exchange rate increase?
★ What will happen to the RMB exchange rate trend?
★ It broke 6.9 for the first time in two years. What happened to the RMB?
★ What is the exchange rate trend of ruble against RMB?