To Stabilize The RMB Exchange Rate, We Must Have Interval Thinking.

Why RMB depreciates? This is not a good problem. At present, the pricing of the RMB exchange rate has gradually become market-oriented. Even if the central bank intervened in exchange rate, it would also adopt market-oriented means to guide market supply and demand rather than simple official pricing.

Therefore, the trend of the RMB exchange rate basically reflects the many demands of the market, which is precisely a release and adjustment of investor sentiment in the process of economic adjustment, but helps to manage expectations.

Just like the appreciation of Japanese yen for more than half a year, it can not explain that the Japanese economy is improving, the market tends to overreact in the short term, and the long-term elasticity is not enough.

The complexity of the foreign exchange market is much better than the economy itself.

China's special concern for exchange rate is that the Chinese market is still a cause.

If the whole market of public opinion releases too much devaluation of the RMB, it will be easy to form a herd effect such as centralized exchange and so on.

As for the adjustment in line with market demands, in fact, the willingness of active intervention at the official level is not strong. On the one hand, the central bank will not waste foreign exchange reserves on the intervention exchange rate in order to maintain the price that a market does not recognize at all. On the other hand, the Chinese economy has not yet seen a major risk event that has caused the disorder of the people's currency.

After the festival, the central parity of RMB against the US dollar has continued to decline, and it has returned to the top 6.72, reaching a new low of six years, and is only one step away from the two starting point of the 6.82 exchange rate reform.

The offshore market is even down 8 days.

On the one hand, the market is worried about the further decline of the RMB exchange rate. On the other hand, it is at a loss as to how to deal with the depreciation.

The RMB's exchange rate with the US dollar has dropped sharply in the short term. It is not the result of a single factor. At this low level, at least four factors come together at the same time.

1. Since last week, a number of officials of the Federal Reserve have expressed support for raising interest rates. The US dollar has strengthened, and most of the non US currencies have fallen, especially the pound's fall.

Two, before the holidays, major cities in China issued new real estate control measures, investors worried about the housing market cooling down, the funds gathered in the real estate market may choose to "drain" and lower the offshore market expectations of the RMB exchange rate.

Three, data released on Friday show that China in September

The decline has exceeded expectations and has declined for three consecutive months, and foreign exchange reserves have continued to decline.

On the one hand, there is the influence of capital outflow. On the other hand, it may be the intention of the Central Bank of China to sell foreign exchange reserves to stabilize the RMB exchange rate. In any case, it is bad news for the RMB exchange rate.

Four, after the RMB was brought into the SDR,

The long-term demand for RMB is more optimistic, but in the near future, investors are expected to have higher reform of RMB free convertibility. Domestic investors have greater demand for overseas assets to balance the risk of holding too many domestic assets, and this demand will also inhibit the short term exchange rate of the RMB.

The market has always thought that the price of 6.7 is very critical, but from the whole trend, 6.7 is not a special point.

For the exchange rate market with increasing volatility, it is not necessary to set "tolerance" for the specific points of exchange rate. It is possible to try to maintain an interval, for example, 6.8 - 7 is a very important area in the future. Once we fall below the 7 threshold, it will give rise to panic in the market. This will mean that after the reopening of the RMB in 2010, its appreciation of the dollar has been completely erased.

But it depends on the specific time cycle. If it breaks 7 after a year, the impact on market sentiment will not be too great and it will hardly arouse excessive speculation in the market. Therefore, it is the key to manage the anticipation and grasp the depreciation rhythm as far as possible, rather than prevent its depreciation.

Compared with the very mature economies in exchange rate management, China still has a long way to go. Management expectation is a technology and an art for central banks.

Although the pound has fallen sharply (the pound has fallen by 17% since the European referendum), Britain does not seem to be worried about the depreciation of the British pound. David Davis, the British Minister for European affairs, has just said that it can see the benefits brought by the pound down to a 30 year low, and the weakness of the pound will help exporters.

Saunders, a member of the Bank of England Monetary Policy, said yesterday in response to a question raised by the British House of Commons Finance Committee. "In view of the size and sustainability of the current account deficit in the UK, I would not be surprised if the pound fell further."

He said that the lowest interest rate in history may decline again, and the Bank of England can also push its asset purchase plan.

Although the international market is silent about the "competitive depreciation" of sovereign currencies, the whole market is still different in terms of specific operational level, and the United States is no exception.

Evans, the chairman of the US Federal Reserve of Chicago, who has the right to vote in 2017, has just said that the relative strength of the US dollar has posed a challenge to the manufacturing industry. Lower import prices show that the US dollar has already brought some pressure.