Niu Wenxin Tells You How To Make A Difference In The Stock Market.

The appreciation of the renminbi after the sudden devaluation is correct, but it can never go on like this.

We should not break this expectation in the light of the expectation that the market will appreciate steadily in the long run.

More importantly, in the longer term of the future, we will gradually release RMB over estimated bubbles.

It's hard, but it has to be done.

This time really depends on Zhou Xiaochuan's wisdom.

No matter whether it is promotion, derogatory or stability, no central bank of any country will make any commitment on the issue of currency exchange rate.

However, we, especially the central bank, often issue views on the RMB exchange rate. I think this is very inappropriate and should even be considered a mistake.

Why? First, the exchange rate actually uses other countries' currencies.

Valuation, so the currency exchange rate is not a single country's final say, it depends on the opponent's national currency's level, strength and weakness.

For example, the exchange rate of RMB against the US dollar is rising, depreciated or stable, which is not only determined by China's monetary policy, but also depends on the US monetary policy.

When the US puts money into large quantities and the US dollar devaluation is very strong, if China does not take the same level of easing policy, then the renminbi will appreciate. On the contrary, just like now, the US monetary policy needs to be shifted. The US dollar appreciation expectation is very strong. But if China's monetary policy has no reason or no conditions to follow the Fed's interest rate increase, then the RMB should depreciate.

This is the inevitable rule determined by the international monetary system at present, and it is not the kind of thing anyone wants to do.

Second, the choice of monetary policy of any country must focus on its own economic situation, and it should mainly adjust the strength of domestic economic domestic demand.

China is a developing country, and developing the domestic demand economy has become a national strategy. Therefore, monetary policy should be more conducive to the growth of domestic demand.

In particular, China's downward pressure on the economy is increasing. Now, more relaxed monetary policy is almost the only option.

That is to say, the probability of China's monetary policy going against the US monetary policy is almost 100%, then the corresponding dollar appreciation and RMB depreciation should also be 100% probability? I think so.

For this reason, I firmly oppose the commitment of the Central Bank of China to "RMB exchange rate stability".

Because stability means China is bound to stick to monetary policy. When it is loose, it does not dare to relax.

This is equivalent to saying that China's monetary policy is not based on less needs, but more on the issue of exchange rate and more on external demand factors.

Of course, it is quite understandable that at the moment, it is very difficult to amend the past "exchange rate overshoot".

On the one hand, the domestic economy's demand for loose monetary policy must lead to the devaluation of the RMB. On the other hand, we must ensure that the depreciation of the RMB exchange rate will not change into an exchange rate attack, resulting in a currency crisis.

You know, in the process of overvaluation of RMB, a lot of involvement in foreign debt is the most willing thing for business operators to do. It can not only satisfy the demand for liquidity, but also increase arbitrage in the process of RMB appreciation.

Income.

It is also true that if the RMB depreciates, all foreign exchange financing costs will rise correspondingly, which will obviously lead to the dilemma of the central bank. On the one hand, we should reduce the financing cost of domestic debt free enterprises with loose monetary policy and low interest rate policy. On the other hand, we have to consider that domestic enterprises with foreign debts will raise the financing cost due to the aggravation of the external debt burden.

Therefore, the currencies of developing countries are most afraid of being overestimated. If they fail, financial crises and currency crises will emerge.

This is probably not the question of how much foreign exchange reserves are, but more importantly,

In the process of overestimation, there will be a real estate bubble. In Japan and Southeast Asia, there has been a crisis of real estate bubble burst due to overvaluation.

Japan's foreign exchange reserves are huge, but not because of the overvaluation of the real estate bubble. The real estate bubble burst does not still lead to the Japanese banking crisis and financial crisis. Just like Southeast Asia, when they use capital account income to make up for the current account deficit, they carry out the fixed exchange rate system, which means that their currencies are seriously overvalued, resulting in the real estate bubble; the real estate bubble burst leads to the financial crisis and currency crisis.

As for the Chinese stock market, I think we should welcome the depreciation of the renminbi, because it indicates that China is moving towards monetary easing.

Never be misled by evil forces.

They most want to see that China's stock market has fallen because of the depreciation of the renminbi, because their consistent hope is that the renminbi will continue to appreciate and enlarge the real estate bubble in China.

Now, they are changing their tactics to try to destabilize China's currency policy by devaluing the renminbi and letting the central bank not dare to loose money.

You know, the nominal interest rate of China is decreasing, but the real interest rate is still very high.

For example, if we consider the price problem of PPI growth of 4% to 5% embedded in interest rates, the benchmark lending rate for Chinese enterprises will be as high as 8%, while the real interest rate will be higher.

So we are here to tell investors not to be fooled.

We will not only mislead our investment, but also increase the difficulty of the central bank's regulation and control.