Recently, the dollar has been staggering upwards, and many small partners are beginning to feel a stir in their hearts.

Q1.Why the RMB exchange rate broke through 7 this time?

Answer: To cope with the more and more frequent tariff policy from Unite State during the trade war, to offset the tariff pressure & protect foreign trade area of China.

Q2.Why Trump gets more and more anxious while China seems to have calmed down?

Answer: the mid-term election of United State is approaching, votes are Trump’s KPI. The bottom class - farmer is trump’s tickets warehouse, so forcing China to buy agricultural products is the priority. While what China wants is a fair negotiation outcome, either a fair negotiation or a continuing grinding. It has been grinding for so long, and now the balance is really turning around compared with the beginning.

Q3:Will the RMB exchange rate keep increasing in future?

Short-term expectation:

RMB exchange rate will be still two-way fluctuation, maintain stability, respond to the international economic environment to enlarge the flexibility of exchange rate space, when external shocks need to be dealt with, controlled limited devaluation, slow and steady appreciation after mitigation, and complete a healthy and orderly transformation.

Medium and long term expectation:

Through the Belt and Road, we can accomplish the internationalization of RMB (at least Afro International), upgrade the internal industry, and drive the economy with consumption.

The transformation must be successful, but if we want to ensure the success of the transformation, RMB cannot depreciate substantially, and a weak and unstable currency will not become an internationally recognized currency.

Conclusion:

Exchange rate will still linger between 6-7 to response to the complex internal and external environment in near future, however, the disadvantages outweigh the advantages if exchange rate beyond 7 from the perspective of China's long-term interests, so the long-term continued substantial depreciation space is limited, and resistance is increasing.