Maybe The Central Bank Is Going To Blow Up The Renminbi.

On Tuesday (January 12th), after rumors that China's central bank launched its intervention, the recent concern over the RMB short - to - air battle ended with a temporary victory for the central mama. By the end of the press release, the offshore renminbi rose 186 basis points against the US dollar at 6.5862, while the offshore renminbi against the US dollar fell 67 basis points to 6.5785, and offshore and onshore RMB prices reversed. The price difference between the two sides also narrowed to 77 basis points from the previous 1600 basis points.

Guotai Junan Ren Ze, an analyst of equality, pointed out in the intraday report that the offshore renminbi rose 1000 points against the US dollar on the previous trading day, and the offshore exchange rate narrowed on shore. From the perspective of trading volume and control, the Central Bank of China (PBOC) may intervene in the offshore and offshore foreign exchange markets.

At the same time, the Chinese people's Bank of China has sharply adjusted the central parity price for two consecutive days, releasing the strong signal that the central bank hopes the RMB will remain stable, forcing market participants to start lifting the US dollar / offshore RMB long position.

In the currency competition, careful observation shows that China's central bank's "exploding" foreign shorting force is very ingenious. It not only uses traditional selling dollars to buy renminbi, but also defends the exchange rate by tightening the way of RMB liquidity in the offshore Hongkong market.

In fact, before the launch of the Central Bank of China, a "Declaration of war" has been issued. The central bank's website has forwarded to China's currency net commentator article: "some speculative forces are trying to sell renminbi and make profits from it. Their trading behavior has nothing to do with the real economic demand. Instead of representing the real market demand and supply, it will only cause abnormal fluctuations in the RMB exchange rate and send an erroneous price signal to the market.

In the face of these speculative forces, the people's Bank of China has the ability to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

The intervention of the Central Bank of China is not confined to oral matters. Bloomberg quoted people familiar with the matter as saying that the measures taken by the central bank are mainly to restrict the speculation of idle funds, especially foreign capital, or to arbitrage on shore exchange differences. China will also increase its verification of trading in false trade background.

Tommy Ong, head of DBS bank's wealth management solutions division in Hongkong, points out that many channels for pferring funds from offshore markets to offshore markets have been blocked, which, to some extent, created a shortage of Renminbi in the Hongkong market.

Xu Gao, chief economist of Everbright Securities, has suggested that the renminbi supply in offshore markets should be controlled and the renminbi in the offshore market should be tightened if necessary.

At the same time, we need to change the regulation.

The strategy should take the lead rather than passively cater to market expectations.

And the central bank tightens offshore renminbi.

The overnight effect of the Hongkong interbank offered rate (Hibor) rose by 53% to 66.82% during the day, which was 4 times higher than the previous record set by the previous trading day, and Hibor was 13.4% yesterday.

At the same time, Hibor rose to a record high of 33.79% and 28.34% in a week or two weeks.

Yang Yuting, senior economist at ANZ bank, said that this actually reflects the real expectation of offshore RMB prices in the market.

When the RMB is at parity, it should take into account the factors of currency depreciation. This requires increasing interest rates to make up for possible losses in the future.

Michael Every, head of financial market research at Rabobank in Hongkong, Holland, said Hongkong's overnight borrowing costs (Hibor) soared, reflecting the possibility of further efforts by the people's Bank of China (PBOC) to put an end to speculation.

and

In the case of "no food and no food", the short time left the field, which led to a trampled market. Fiona Lim, senior foreign currency analyst at Malaya bank in Singapore, said that a large number of US dollar / offshore renminbi long positions were being liquidated in the past few days when the central bank released a strong signal for the recent weakening trend of the renminbi.

Analysts point out that buying and holding RMB pushing up the exchange rate in the offshore market can narrow the price difference between the two sides, frustrate the rapid development of arbitrage pactions, and on the other hand, push the cost of borrowing short of the renminbi to a record high.

Under such circumstances, the continued cost of the renminbi is high, and there is no "ammunition" to maintain it, and short positions are blocked.

This is a strategy of strangle after choking off spot and forward arbitrage channels.

A foreign trader in Shanghai, a foreign exchange trader, said, "now that the market expects the renminbi to depreciate, enterprises and individuals in Hongkong will tend to reduce their liabilities while increasing their liabilities. Therefore, the demand for RMB will be increased in the market, and the pressure of depreciation will increase. Banks will need to raise interest rates to make up for the depreciation costs arising from the future receipt of Renminbi positions. Correspondingly, the interest rate of Hongkong's offshore RMB will rise sharply."

Zhou Hao, an Asian economist at Commerzbank in Singapore, said: "everyone is borrowing offshore renminbi and then shorting - which means that if there is a short replacement, it may be very crazy."

Facts have also proved that a lot of shorts and backhand have played a great role in boosting the rebound of offshore renminbi.