Funds In The Global Market Are Pouring Into The Chinese Market.

Since the reform of the RMB exchange rate system in August 11, 2015, the unilateral appreciation of the renminbi has suddenly reversed, triggering the shock of domestic and foreign stock markets and foreign exchange markets.

China is an economic power. The change of the RMB exchange rate not only causes the adjustment of global assets, commodity prices and various interest relations, but also causes fundamental changes in global capital flows.

Before the "8. 11" exchange rate reform, the capital of the global market poured into the Chinese market. The central bank had to hedge the way to issue large amounts of RMB, prompting the rapid economic growth, and also led to the rapid rise of asset prices.

The RMB exchange rate suddenly fell, a large number of capital outflows, China's foreign exchange reserves declined, asset prices began to appear downward.

As the RMB exchange rate continued to fall, the international market

It is believed that China's economic growth will be more and more downhill in the future. This may lead to a comprehensive decline in China's demand for international markets, thus affecting the economies of various countries around the world.

Under this expectation, the wave of speculation in the renminbi has been lifted.

Such speculation is not only about the downward trend of the renminbi, but also exacerbates the turmoil in China and the global market and the capital escaping from China.

Therefore, the problem of RMB decline has become a serious problem that plagued the domestic and foreign markets, and also an important reason for the decline of A shares.

In February 15th, the offshore RMB exchange rate rose to 1.24% against the US dollar, at 6.4944, the highest closing price since 2016, or more than 800 points, the largest single day increase since 2005.

Offshore RMB against the U.S. dollar trend, fell from 6.5110 to 6.5354, and finally reported 6.4993.

Traders in the foreign exchange market thought that the rise of the renminbi was due to the adjustment of the US dollar and the rise of offshore renminbi during the Spring Festival.

In February 15th, the RMB exchange rate returned to the level of August 2015. This not only means that the government is determined and capable of confronting international speculators, changing the current downward expectation of the RMB exchange rate, but also allowing the stability of the RMB to re establish the interests and capital flows of China and the global market.

We must seriously interpret this.

Because,

The exchange rate is basically determined by expectations. If the expected management effect is not good, it will make the market lose its way and create more opportunistic opportunities for the short sellers.

Therefore, the expected management effect of RMB is an important factor for the stabilization of RMB.

Of course, for the expected management of the renminbi, the central bank should focus on the offshore market.

This market is not only a high degree of marketization, but also an important place for international investors to attack the RMB exchange rate.

Regarding the RMB exchange rate question, Zhou Xiaochuan believed that

Current account and speculative factors are not the core influencing factors of RMB exchange rate fluctuations. These disturbances can only form short-term effects and do not have continuity. The most important variable affecting the RMB exchange rate is the exchange rate regime.

For example, pegging to the US dollar fixed exchange rate system or pegging the basket exchange rate system and international consultation, this is the biggest uncertainty of the current RMB exchange rate issue, and it is also the most effective way to deal with international speculators.

If the RMB exchange rate can be stable, the funds to escape from China will cease and negative expectations will reverse.

At home and abroad, the market can get rid of the fog and see the sun and return to normal orbit. A shares can also stabilize in the process.

Of course, the most important concern of the current market is whether the renminbi can be truly stabilized.

Judging by Zhou Xiaochuan, governor of the central bank, this should be uncertain because the current global financial market is facing too much uncertainty.

In fact, the uncertainty in the real market is objective and can not be eliminated by authoritative interpretations.

Therefore, whether the RMB exchange rate will be stable in the future depends largely on "new data input" or on the basis of changes in the market situation.

If the overall economic situation is not good, the renminbi will also face downside risks.

Also, in Zhou Xiaochuan's view, in many cases, if the central bank gives the market a clear prediction, market expectations can easily become very stable or even harsh, but it may lead to a reverse misreading if the market can not fully meet expectations.

Since the reform in August 2015, this is what happened in the RMB foreign exchange market.

Therefore, the foreign market emphasizes the openness and pparency of the central bank's exchange rate policy, which does not seem to be applicable to the Chinese market.

Otherwise, the RMB exchange rate policy is easier to be used by speculators in the external market, and speculation is prevalent.