Last week, the RMB exchange rate index hit a new high of more than 9 months. Since 2019, the positive factors facing the operation of the RMB exchange rate have increased, and the market exchange rate is expected to continue to stabilize. It is expected that the trend will continue to stabilize in the future.

According to the latest data from the Foreign Exchange Trading Center, the CFETS RMB exchange rate index on April 19 was 95.51, up 0.14 per week, the highest since July 6, 2018. The RMB exchange rate index calculated with reference to the BIS currency basket and the SDR currency basket also rose. On the 4th and 19th, the above two indexes were 99.23 and 95.77, respectively, up by 0.37 and 0.4, respectively, on June 22, 2018 and 2018. New high since the 6th of the month.

Since December 2018, the RMB exchange rate index has been transferred to the upward process. As of April 19, the CFETS RMB exchange rate index has appreciated by 3.6%. During the same period, the central parity of the RMB against the US dollar has appreciated by 3.35%. The renminbi has appreciated against the US dollar and against a basket of currencies at the same time. The strong operating characteristics are more obvious, and the renminbi is outstanding in emerging market currencies.

The reason is that the main unfavorable factors that led to the weakening of the renminbi in 2018 have seen positive changes. In 2018, the renminbi weakened against the US dollar. In the second half of the year, a basket of currencies also showed a significant depreciation. The root cause was two points: First, the Fed’s steady interest rate hike and contraction made a strong dollar, and the US dollar appreciated against the renminbi. Second, local credit. The contraction and superposition of the external environment deteriorated, causing China's economic growth to decline, and fundamental pressures prompted the RMB to actively adjust to the US dollar. Since the end of 2018, the pressure of RMB depreciation brought about by these two aspects has been alleviated to varying degrees. On the one hand, the Fed entered the policy observation period, suspended interest rate hikes and may end the contraction in advance, and the dollar continued to increase its risk significantly; on the other hand, as macroeconomic policies increased counter-cyclical adjustments, wide credits gradually became effective, and bottoming economic growth The role has begun to play, and the external environment has not continued to deteriorate. The Chinese economy has been running smoothly and there have been some positive changes. The fundamentals of the RMB exchange rate have been re-enhanced.

For some time to come, the positive factors supporting the stable operation of the RMB exchange rate are expected to continue to increase.

The cyclical deviation of the Sino-US economy and the Sino-US monetary policy is expected to be further alleviated. At present, the US economy is falling to the top, and the Chinese economy is bottoming out. This situation will continue at least in the second quarter. At the same time, the Fed slowed down the pace of tightening monetary policy, and even the expectation of interest rate cuts in the market, and China's monetary policy may be difficult to further relax. The expected decline in liquidity in April and the decline in liquidity will prompt the market to adjust to the relaxation of monetary policy. Judge.

Under this macro background, the spread between China and the United States has re-expanded. In the 10-year period, the US bond spread returned to more than 80 basis points. Foreign exchange reserves have risen for five consecutive months. The attractiveness of RMB assets has risen and the pressure on capital outflows has been greatly reduced. Since the beginning of this year, the scale of foreign capital inflow into the A-share market has increased. As Chinese bonds are included in important international indexes, the drainage effect of the bond market is also worth looking forward to. The expansion of the capital market will also provide certain support for the RMB exchange rate.

It is worth noting that as of March 2019, the bank's forward foreign exchange settlement and sales has maintained a surplus for seven consecutive months, and the surplus has increased month by month, indicating that the RMB exchange rate is expected to continue to stabilize.

Considering that the downside of the US dollar index may not be large, the appreciation of the RMB against the US dollar is temporarily limited. The recent high probability will fluctuate within the range of 6.6-7 yuan. The outstanding performance of the RMB in non-US currencies may cause the exchange rate index to remain strong and volatile.