6.8! The RMB exchange rate fell sharply in the afternoon! Will it fall below the seven mark this yea

As the DOLLAR index stood firm at the 104 mark, the renminbi continued to fall against the dollar.

On May 12, the offshore RMB, which reflects the expectations of international investors, fell below the 6.77, 6.78, 6.79 and 6.80 levels against the DOLLAR in succession.

The last time the offshore yuan traded below 6.80 against the dollar was On September 30, 2020. The offshore renminbi has depreciated 6.8 per cent against the dollar so far this year.

The onshore market is also weak. On May 12, after opening at 6.7355, the spot exchange rate of RMB against US dollar fell below 6.74, 6.75 and 6.76 successively, down more than 350 basis points from the previous trading day.

The yuan has fallen more than 6% against the dollar this year.

Will the RMB exchange rate fall below 7 this year?

For the future of the RMB exchange rate, ubs securities chief China economist wang tao is expected, the next few months the yuan exchange rate against the dollar weaken further, even in years breakthrough "7" this barrier, and the forecast in the second half, with stabilizing economic growth rebound, market confidence is gradually restored, the yuan at the end of the year or will be back in less than 7.

However, the industry is divided on whether to fall below the threshold of 7. Tan Yaling, president of China Foreign Exchange Investment Research Institute, believes that the probability of breaking 7 should not be particularly large, because the probability of the US dollar index callback is large, and the possibility of going up is not too big, it has a strong restraint at the 104 level.

Cheng Qiang, chief macro analyst of Citic Securities, pointed out that the US raised interest rates by 25 basis points in March and 50 basis points in May, and is likely to raise interest rates by another 50 basis points in June and July, so there is still some depreciation pressure on the RMB exchange rate in the short term. In the medium to long term, the scope for further depreciation of the RMB is limited, as China's exports are expected to support the RMB exchange rate again after the COVID-19 recovery and China's economic fundamentals are expected to gradually improve.

Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, said at a press conference on April 22 that the RMB exchange rate will fluctuate in both directions and remain basically stable at a reasonable and balanced level. The Chinese economy is highly resilient, and its long-term trend of sound development remains unchanged. The balance of payments structure is sound, the current account surplus remains at a reasonable scale, and RMB assets remain of long-term investment value. All these will provide fundamental support for the basic stability of the RMB exchange rate.

A weaker yuan is good for exports

Generally speaking, after RMB depreciation, import will be under pressure, but good export.

China's imports and exports of goods grew only 0.1 percent year on year in April, down 5.7 percentage points from March, data from the General Administration of Customs showed Thursday. Exports rose 1.9 per cent from a year earlier, down from 12.9 per cent in March.

According to Zhang Ming, deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences and deputy director of the National Finance and Development Laboratory, the EFFECTIVE exchange rate index of the RMB reached a record high at the end of last year. This shows that the RMB exchange rate is too strong at the same time that macroeconomic growth is falling. Therefore, tolerating the depreciation of the RMB against the DOLLAR at the moment is more beneficial than harmful. Last year the yuan rose 10% against the euro and 12% against the yen, such strong appreciation that our exports to the EU and Japan have been greatly affected. A modest devaluation of the exchange rate would be good for Chinese exports.

Wang Tao also believes that the RMB exchange rate has accumulated a relatively large appreciation in the past more than a year, and has been somewhat overvalued. Now, it is not necessarily a bad thing to adjust moderately in accordance with the market and in accordance with the domestic monetary policy to help support exports and economic growth.

Many listed companies in the interactive platform to respond to investors talk about the impact of the devaluation of the RENMINBI. Digital World said that the company's overseas sales revenue accounted for 65.27% of the company's total sales, the company's procurement is mainly domestic, the devaluation of the RENMINBI has certain benefits for the company; The company's products exported to the North American market are settled in US dollars, so the depreciation of RMB is beneficial to increase the company's exchange income.

However, the depreciation of RMB will also increase the cost of traveling, shopping and studying abroad.

Zhao Yan (pseudonym), a student studying in New York, said she lives on about $2,500 to $3,000 a month, adding that the dollar's rise costs her about 1,000 yuan more each month. If the dollar continues to rise at the time of tuition, it could be equivalent to paying a lot more yuan.

Source: Zhejiang Rush comprehensive collation from China news network, the paper news