RMB Two-Way Volatility Approaching Compression Hot Money Arbitrage Space

"P", a spokesman for the central bank said in response to a reporter's question, "with the advance of the reform mechanism of exchange rate marketization, the future RMB will have the same flexibility as the major international currencies.

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< p >, can RMB really achieve two-way fluctuation? < /p >

< p > "if we only expand the wave amplitude, we will definitely not achieve two-way fluctuations in RMB", Zhao Qing Ming, an international expert, told the daily economic news.

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< p > Zhao Qingming analysis shows that simply extending the floating interval is of little significance, and really lets the market play a role in the formation of the RMB a href= "http://www.91se91.com/news/index_cj.asp" > /a > /a, forming a flexible exchange rate. There are three main tasks: to relax the principle of real demand, to allow investment in speculative foreign exchange pactions, to withdraw from normal intervention, to release the spot trading market maker to make the market, and the three is to develop a more standardized and pparent exchange market.

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< p > April 2012, the central bank will expand the exchange rate volatility of the "a href=" http://www.91se91.com/news/index_cj.asp "RMB to us dollar < /a > from 0.5% to 1%, but after that, the trend of RMB two-way fluctuation is not obvious. From April 2012 to now, the appreciation rate of RMB to the US dollar has appreciated by more than 2%.

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Xie Yaxuan, director of macro research at the development research center of China Merchants Securities (10.18, 0, 0%), told reporters that the possibility of two-way fluctuation of RMB is great, but it should also cooperate with < a href= "http://www.91se91.com/news/index_cj.asp" > capital account /a > convertible P.

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Liu Ligang, director of economic research at the Greater China region of the New Zealand Bank, believes that the possibility of two-way volatility is possible. However, the most important thing is whether the central bank can encourage capital outflow. If the capital presents a two-way capital flow state, the RMB can also fluctuate in directions.

Otherwise, due to the spread and the growth of China's economy, China will still attract capital inflows and promote the rise of the renminbi.

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< p > Zhao Qingming said that if the breadth and depth of the market can not be expanded, only by amplifying the fluctuation range, the elasticity of exchange rate will not only increase, but will strengthen the unilateral expectation of the market, resulting in the overshoot of exchange rate and the adverse effects on the real economy, which will also lead to more abnormal cross-border capital flows.

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< p > "if the fluctuation of RMB exchange rate increases, then the international capital inflow at least for arbitrage purposes will be reduced", Xie Yaxuan said.

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In the months after P expansion in April 2012, domestic capital outflows were obvious.

From April 2012 to November, the trend of hot money outflow was obvious. For example, according to the residuals method, the hot money in October 2012 went out of about 36 billion 800 million US dollars, and in September and August, there were 15 billion 500 million US dollars and 37 billion 700 million US dollars hot money flowing out of China, respectively.

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< p > however, the above trend has been improved in 2013. Since January 2013, the number of new foreign exchange funds has begun to change. In March, the amount of hot money inflow is about US $26 billion, while the hot money inflow in February is about US $24 billion. According to the analysis of the previous industry, the flow of capital is more related to the overall economic situation at that time.

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< p > Xie Yaxuan in the latest research report believes that the central bank's further expansion of the RMB exchange rate volatility is intended to enhance the effectiveness of monetary policy, hoping to reduce intervention in the foreign exchange market. "The central bank basically quit normal foreign exchange intervention" and gradually get rid of the mode of relying on foreign exchange to fund the basic currency, so as to enhance the effectiveness of domestic monetary policy.

It is expected that after the expansion of the RMB exchange rate, the main body of the economy will hold foreign exchange outside the trading demand, and may hold foreign exchange for speculative demand. The willingness to hold foreign exchange may rise, and the growth rate of the new foreign exchange will decrease correspondingly.

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