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China'S Central Bank Raises Interest Rate &Nbsp; RMB Will Accelerate Appreciation After Holidays

2011/2/10 15:08:00 67

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The people's Bank of China (PBC) decided on Tuesday (February 8th) to raise financial institutions from February 9, 2011.

RMB

Deposit and loan benchmark interest rate.

The benchmark interest rates for the one-year lending and lending rates of financial institutions were increased by 0.25 percentage points to 3%, and the benchmark interest rates of other grades were adjusted accordingly.

Official figures released earlier showed that China's CPI rose 4.6% in December from a year earlier, though it was 28 months away from November, but it remains high.

However, the market is widely expected that the Chinese government will face enormous inflationary pressure in the first half of this year. The growth rate of consumer price index (CPI) in some months may exceed 6%.

China raised the deposit reserve rate for the six time last year, which was raised again at the beginning of this year.

deposit

The reserve ratio rose for the first time in the last three years of last year, and the interest rate was raised two times continuously. The interest rate rose again today. At the same time, the value of RMB rose 3.6% after the reopening of the foreign exchange reform in June last year.

The deposit reserve rate, interest rate and exchange rate "three rates" have obvious purpose of resisting inflation.

The market almost agreed that the Chinese government will continue to raise the deposit reserve ratio of banks and allow the appreciation of the renminbi to help reduce import prices and ease domestic inflationary pressures.

The appreciation of the renminbi can offset the inflationary pressure brought by the rising global food and international energy and raw material prices.

At the same time, RMB appreciation.

foreign exchange

Pressure is also continuing to ferment.

Although the United States did not include China as a currency manipulator, the US financial Geithner still reacted the day before yesterday, suggesting that the pace of appreciation of the renminbi was not enough, leading to some free floating currencies, such as the over pressure of capital inflow in Brazil, and all the responsibilities of the US banknote leading to liquidity inflows to China.

India officials also echoed that the undervaluation of the RMB exchange rate led to damage to India's export enterprises.

Australian officials also said that European and American monetary easing and the issue of China's RMB exchange rate led to high international commodity prices.

It is not easy for emerging markets to be on the Chinese New Year's Eve. After India raised interest rates last month, it suddenly raised interest rates by 50 basis points in less than a month. Indonesia was also unable to hold back and eventually chose to raise interest rates. Emerging market currencies once again experienced strong capital inflow and currency appreciation pressure in the new year.

As an emerging market leader, the international pressure on RMB appreciation in China will further increase.

In addition, with the accelerating pace of RMB internationalization, the demand for RMB in the international market has increased sharply.

Although the Chinese market closed during the dark market, the offshore renminbi market hit a 1 month high against the US dollar on Monday, as some Chinese companies and overseas companies bought the renminbi in March for Hongkong's IPO valuation.

A trader in Singapore bank said that overseas brokerages are gradually collecting renminbi to prepare for the RMB IPO paction.

The US dollar is likely to drop 6.5500 yuan in the near future.

In the current international and domestic economic situation, it is the consensus of the market to maintain the appreciation of the RMB, but there are different views on the speed of appreciation.

Economists from several institutions predicted that the appreciation of the RMB against the US dollar would be between 3% and 6% this year.

Despite the increasing pressure on international politics and speculation, China is still unwilling to allow the renminbi to appreciate faster and wider.

However, it is expected that the government will make a significant appreciation of the RMB against the US dollar in the coming year to ease international pressure and reduce the threat of protectionism, while curbing domestic inflation and promoting economic restructuring.