The Signal Of Currency Stability And Risk Resistance Looms.

After the central bank's 930 policy, we pointed out that monetary easing began to increase. In January 16th, when the wind was waiting, what did the central Mama really want? It was pointed out that the central bank would "supervise and relax later, and the new year's two sessions would be a period of relaxation and sensitivity." However, after the recent second cuts in interest rates, two technical officials' remarks may imply that monetary policy is entering a new stage. Specifically,

1) in February 28th, the director of the Department of safety and environmental protection, Mr Tung Tao, wrote an analogy between the current situation and the Asian financial crisis.

2) in March 4th, President Yi Gang said, "the exchange rate can remain basically stable and there is no need to adjust the floating range of RMB".

From the above signals, the monetary authorities have begun to worry about the devaluation pressure of the RMB market. From this perspective, the central bank may be entering the "risk prevention" as the core of the "risk response mode".

　　 To prevent risks, we must first stabilize. exchange rate 。

The expression of easy president obviously made some earlier. foreign capital The exchange rate fluctuation range is expected to fail. As the current RMB exchange rate has been hit on the limit, if the intra day trading range is not released, then the spot rate can only follow the middle price. If the middle price does not move, the depreciation rate of RMB against the US dollar will be 0, and the appreciation will be +4%. Based on the statement made by the president of the Yi Gang, we emphasize once again that the risk of continued short selling is far greater than that of potential returns. In the background of a large number of chips, it is clearly not wise for them to continue to short the renminbi.

　　 To prevent risks and stabilize economy, we need to loose money.

Interestable, in the 2 interest rate cut, a comprehensive reduction, and a number of open market operations, pan president in an interview today, he mentioned "in constant evaluation of real estate financial policy." As we mentioned in the day before yesterday, "the big turning point of real estate policy orientation", the focus of the government's real estate policy has shifted to "stable price". And in the context of ample supply, financial support for real estate demand is one of the necessary conditions for the current "stable real estate price". From the perspective of "hard landing and anti panic funds withdrawal", the relaxation of monetary policy, especially for real estate demand, should only be a matter of time.

　　 Why is "stable exchange rate + loose?" currency Can it be done?

There are always people who question the paradox of Mundell's three dollar theory. How can the people's Bank "loose currency" achieve "stable exchange rate"? In fact, it is very simple:

First of all, since China's cross-border capital is not 100% free flowing, it will not violate the three dollar paradox in itself.

Secondly, the domestic and foreign spreads really affect the exchange rate, but the question is whether the interest rate is long-term or short-term interest rate. If the short-term monetary easing will lead to the improvement of the medium and long-term growth prospects, will the long-term interest rate rise expectations rise, can it also support the civil exchange rate?

　　 There are signs of reversal in the exchange market.

Recently, offshore renminbi bond yields have risen sharply after the sharp rise, although some of them have no risk of falling interest rates. But in general, we understand more that the risk premium of RMB assets has begun to fall. We emphasize again that from 2015, the probability and potential scale of capital inflow will outweigh the outflow. Summed up in a word, the yuan devaluation began to worry about the central mama, so do not screw up with the central mama.