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Standard Chartered Bank: RMB Fluctuation Intensified But Still Weak

2014/4/29 22:36:00 84

Standard Chartered Bank RMB Exchange Rate

the recent weakening of the renminbi has been caused by the uncertainty of the administration's aim to increase the RMB exchange rate outlook. The main worry is that the expectation of continued appreciation of the renminbi makes capital inflow into large quantities, thereby increasing the pressure on domestic credit growth and inflation. The central parity price announced by the central bank has increased by 0.3% since the recent widening of the trading range. The US dollar / RMB exchange rate itself has risen by 1.6%. 
 widening < a href= "//www.sjfzxm.com/news/index_cj.asp > > trading area < /a > is part of policy reform. Widening the trading range is one of the policy objectives explicitly designed by the Chinese government to make the local currency more market-oriented. The current trading range is fluctuating around the middle price by 2%. The last widening trading range took place in April 2012, when the wave widened to 1% (formerly 0.5%), and in May 2007, the trading range expanded from 0.3% to 0.5%. 
 the past two experience shows that the current "a href=" //www.sjfzxm.com/news/index_cj.asp "dollar" /a "/ RMB rise is not uncommon. In 2012, the US dollar / RMB exchange rate rose to the upper limit of the policy interval, and then dropped to the lower limit. In 2007, the US dollar / RMB exchange rate did not immediately rise to the top of the zone. 
It is not surprising that super short term < a href= "//www.sjfzxm.com/news/index_cj.asp" > RMB > /a > a little lower. According to the middle price of today (April 29th), the US dollar / RMB has enough space in the existing trading area to rise below 6.28. Although the central parity announced by the central bank has continued to decline over the past 5 days, it is still too early to assert that the RMB has returned to the uptrend. 
 policy objective or greater fluctuation rather than sustained depreciation. Any currency depreciation aimed at enhancing the competitiveness of foreign trade is not in China's interest, because its main trading partners may not buy it. In addition, the continued depreciation of the local currency may also be related to the direction of policymakers' efforts, aiming at rebalancing the economy, getting rid of over reliance on low cost exports and stimulating domestic consumption and improving production efficiency. 
 Standard Chartered Bank believes that the current exchange rate provides a good opportunity to buy domestic RMB bonds. In the view of Standard Chartered, the renminbi seems to have depreciated from a percentage point, and even if the yield of treasury bonds can reach as high as 3-4%, the risk / reporting ratio of RMB bonds is quite attractive. Offshore renminbi bonds are also attractive for investors who can not buy domestic bonds.