Market counterattack "underestimation theory": *** devaluation exceeded 100 points yesterday

After the U.S. Senate voted to pass the RMB exchange rate bill, the RMB depreciated against the U.S. dollar in the last two days under the impetus of the US dollar safe-haven buying. Yesterday (October 13th), the central parity of the renminbi fell by a maximum of 11 months. The previous day, the central parity of the renminbi against the US dollar fell by 115 basis points after the bill was passed.

Exchange rate and trade concerns are self-evident. "Daily Economic News" reporter was informed that the foreign trade data released by the General Administration of Customs yesterday showed that the import and export volume in September decreased.

In this regard, CICC said that the decline in economic growth in Europe and the United States has led to a drop in imports and exports, and it is expected to maintain a surplus in the next few months, but the annual surplus will be lower than last year; the flexibility of the renminbi will increase, and there is little possibility of a substantial appreciation.

The central parity of the renminbi fell again before the release of foreign trade data. The central parity of the renminbi against the US dollar was set at 6.3737 yesterday, a substantial decrease of 139 basis points or a decrease of 0.22% from the 6.3598 in the previous trading day, the largest reduction since November 2010.

Since the United States Senate passed the RMB exchange rate bill on the 11th, the Chinese Ministry of Foreign Affairs, the Ministry of Commerce, and the Central Bank have seldom focused on their protests. In terms of the market, the RMB middle price has dropped sharply for two consecutive trading days, and the decline has exceeded 100 basis points.

The import and export data released by the General Administration of Customs yesterday showed that China’s export growth rate in September fell to a new low since February 2011. September exports increased by 17.1% over the same period of last year, which was lower than the market’s previously expected 20% increase, and in August Exports grew by 24.5%. During the same period, a trade surplus of 14.51 billion U.S. dollars was also recorded, which was also lower than the median market forecast of 16.3 billion U.S. dollars.

Lu Peijun, deputy director of the General Administration of Customs, said at a news conference that the renminbi's escalating volatility in the exchange rate will curb the growth of foreign trade exports.

However, "Daily Economic News" reporter noted that on the Hong Kong offshore RMB (CNH) market on Wednesday, the spot exchange rate of RMB against the US dollar was reported at 6.5463 yuan, a difference of 1828 from the current closing price of the RMB market onshore (CNY). Base point, equivalent to a 2.8% devaluation. According to statistics from Bloomberg, the renminbi exchange rate in Hong Kong has been reduced by 1% on average in the past month.

As for the CNY market, the yuan exchange rate is firmer than the CNH market, and the price gap continues to expand. Qu Hongbin, chief economist of HSBC China, believes that the CNH market is more dependent on capital inflows and economic fundamentals, and political factors have limited impact on the CNH market.

However, under the risk of a double bottom in the European and American economies, politicians in Europe and the United States have repeatedly pointed to the fall in the renminbi in an attempt to shift their domestic perspectives and implement trade protection measures. Following the United States Senate's vote to pass the exchange rate bill, yesterday EU Trade Commissioner De Gucht stated in a speech in South Korea that China’s currency exchange rate cannot reflect economic reality.

There is little possibility of significant appreciation. The China International Gold Corporation issued a report yesterday that the slowdown in economic growth in Europe and the United States has caused the growth of imports and exports to decline, and it expects to maintain a surplus in the next few months, but the annual surplus will be lower than last year. As a result, the flexibility of the renminbi has increased and it is unlikely that a large appreciation will occur.

The report believes that due to the uncertainties of the impact of large exchange rate fluctuations on the domestic economy, the RMB is unlikely to appreciate significantly against a basket of currencies. A sharp appreciation of the exchange rate is not the main option for confronting imported inflation. It is expected that the exchange rate of the RMB against the US dollar will increase by 5% to 7% throughout the year and will rise to 6.23% at the end of the year.

In Qu Hongbin's view, China's trade surplus has experienced a marked decline in the past few years. In the first half of this year, the trade surplus accounted for about 2% of GDP, and the current account surplus was only 2.8%, far below the 2007 financial year. 8% to 9% before the crisis.

He said that China’s trade has entered a basically balanced range. In this sense, the RMB exchange rate is already very close to the market equilibrium exchange rate, and the RMB has not been underestimated, and there is no need for further appreciable appreciation. The US renminbi bill will not have any impact on the future trend of the renminbi.

In view of the recent market's expectation of RMB devaluation, Qu Hongbin believes that China's economy is still growing at a rapid rate. Foreign capital continues to flow into China. It is difficult to see the RMB depreciating in advance in the short term. The RMB will not have a significant appreciation or devaluation. It will enter a relatively stable interval. He also said that the recent U.S. bill on the exchange rate of the renminbi is entirely due to political considerations.

Wen Tianna, managing director of China Merchants Securities in Hong Kong, believes that global investors have seen problems in China's economy. It is not wise to increase the appreciation of the renminbi. “The idea of ​​creating jobs through the strengthening of the RMB and helping the economy may be The United States has a market, but it cannot convince investors."

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