Many Factors Make The RMB Exchange Rate Index Depreciate Slightly.

Although the 3 RMB exchange rate indices in June were derogatory to varying degrees, in the background of the sharp fluctuations of the international exchange market in the United Kingdom, the volatility of the RMB exchange rate was much smaller than that of other currencies. In general, the exchange rate of a basket of currencies remained basically stable and the market expectations were relatively stable.

In order to maintain the relative stability of the RMB effective exchange rate, the nominal effective exchange rate of RMB has a certain devaluation requirement.

"We believe that the bilateral exchange rate between RMB and the US dollar will continue to fluctuate on the basis of market supply and demand and reference to a basket of currencies, and the renminbi will remain basically stable against a basket of currencies," he said.

The article points out.

Data show that in June 30, 2016, the CFETS RMB exchange rate index was 95.02, which was 2.19% lower than that at the end of 5; the RMB exchange rate index, referring to the basket of BIS currencies and the basket of SDR currencies, was 96.09 and 95.76, respectively, compared with the end of 5 months.

2.39% and 0.47%.

For June RMB

The reason for the slight depreciation of the index is that the analysis shows that in June, when the dividends of listed companies were concentrated, enterprises and banks remitted more dividends to foreign shareholders, and in addition, the willingness of domestic enterprises to buy abroad was still relatively strong. The demand for foreign currencies was strong because of the strong demand for foreign exchange.

In particular, the referendum of Britain's "off Europe" led to turbulence in the global foreign exchange market and market risk aversion.

The article points out that the market demand and supply changes and the global risk aversion caused by the referendum in Britain are increasing sharply, resulting in the depreciation of the RMB to the US dollar in June.

The exchange rate index has depreciated slightly.

From the point of view of the bilateral exchange rate between RMB and the US dollar, the central parity of the RMB against the US dollar is still operating in accordance with the "closing exchange rate + a basket of currencies exchange rate changes" mechanism.

Before the referendum of Britain's "off Europe", affected by the poor employment data of the United States, the market lowered interest rates on the Federal Reserve, and the US dollar depreciated.

From the whole month, we should maintain a relatively stable RMB exchange rate index and ask for a appreciation of the RMB exchange rate against the US dollar.

In July 6th, the central parity of RMB against the US dollar was 6.6857, down 263 basis points from the previous trading day.

According to the article, from the first half of this year, the RMB exchange rate index has depreciated slightly on the basis of maintaining basically stable, while the small depreciation of the RMB exchange rate index is mainly affected by the change of market supply and demand.

The article further analyzes the reasons, pointing out that on the one hand, the deleveraging of Chinese enterprises' foreign debt is still continuing, and the "going global" will further increase. On the other hand, the Fed's interest rate hike is still uncertain, and due to the lack of effective supervision, some overseas speculative forces and other Asian currencies, including RMB, have also brought some devaluation pressure to the RMB exchange rate.

At the same time, the depreciation of the RMB exchange rate index is also related to the base period factors.

"From a long-term perspective, if we observe the change of the RMB exchange rate index from six months to a whole year or even longer period, the stability of the RMB exchange rate index will be significantly improved."

Commentators say that the depreciation of the RMB exchange rate index is also affected by the slight rise of China's price level. The current inflation rate in China is higher than that in the United States, and the effective exchange rate of RMB is under the pressure of appreciation.