On the last trading day of last week, the central parity of the RMB against the US dollar was reported at 6.4716, a record high since the exchange rate reform. At this time, it has been a year since the exchange reform was restarted last year. Over the past year, the exchange rate of the RMB against the US dollar has appreciated by 5.5%. What are the characteristics of the exchange reform in the past year? Is it moving closer to the expected goals of the policy? Where will the future exchange rate policy go? Since the exchange rate reform was upgraded to 5.5% and the exchange rate reform was restarted, the RMB exchange rate has moved closer to the equilibrium level. The two-way floating characteristics are obvious, and the exchange rate flexibility has also increased significantly. Over the past year, the cumulative appreciation against the US dollar has exceeded 5%. In 2010, with the strong recovery of China's economy, the conditions for normalizing the exchange rate and withdrawing from the stage of the US dollar policy are already in place. On June 19, 2010, the People's Bank of China announced that it would further promote the reform of the RMB exchange rate formation mechanism. The market called “restarting the reform of the exchange rate systemâ€. Over the past year, the overall trend of the RMB exchange rate has shown two distinctive features of “smashing step†appreciation and elasticity enhancement. The data shows that on the second trading day after the exchange reform, the central parity of the RMB against the US dollar rose sharply by 295 basis points, breaking through the 6.80 mark. Since the beginning of this year, in the context of a weaker dollar, the “fragmented†appreciation of the RMB exchange rate has become more apparent. Following the break of the 6.70 mark on the central parity of the RMB against the US dollar on January 13, it broke through the 6.50 mark on April 29, and the RMB exchange rate entered the 6.4 era. It is worth mentioning that, after the financial crisis, the central parity of the RMB against the US dollar is “nailed†at 6.83 yuan. In the past year, while the RMB has shown a “fragmented†appreciation trend against the US dollar, the two-way floating exchange rate is also very obvious. . The data shows that in more than 200 trading days, the central parity of the RMB against the US dollar has appreciated for 147 trading days, and the value of the market has depreciated in 92 trading days. In some trading days, the maximum amplitude of the central parity of the RMB against the US dollar has exceeded 0.2% every other day. Both the appreciation and the maximum depreciation range exceed 100 basis points. On the second trading day after the resumption of the exchange reform, the central parity of the RMB against the US dollar rose sharply by 295 basis points, and the volatility was close to the upper limit set by the management of 0.5%, setting the highest volatility since the resumption of the exchange reform. Induced unilateral appreciation expectations Sun Yun is the head of a garment export enterprise, and their products are mainly sold to European and American markets. He recently talked about a $1 million business, but he was a bit worried about the renminbi’s appreciation over the years. "The other party only paid a deposit of 200,000 US dollars, and 800,000 US dollars will be collected after three months of delivery. If the RMB exchange rate against the US dollar is increased by 1% at that time, I will lose tens of thousands of yuan." Sun Yun told reporters that many small businesses today tend to sign short-term orders to avoid the risk of exchange rate fluctuations under long-term orders. Ding Zhijie, dean of the School of Finance of the University of International Business and Economics, pointed out that the impact of the appreciation of the renminbi on the equilibrium level on the trade sector is more short-term. In the medium and long term, the appreciation pressure will promote the upgrading of the industrial structure, which will enable the Chinese economy and commodities to regain international competitiveness on a new and higher platform. “Restarting the exchange reform has played a role in relieving inflationary pressure to a certain extent.†Zhang Bin, deputy director of the International Finance Office of the World Economic Institute of the Chinese Academy of Social Sciences, believes that when the commodity prices in the first half of the year rise, a certain appreciation of the renminbi can reduce the import of enterprises. Cost, reducing input inflationary pressures. Experts reminded that after the resumption of exchange reform, the market's expectation of RMB appreciation has been strengthened, and the phenomenon of hot money has become obvious. This has become a major constraint to the effectiveness of China's monetary policy. “The important role of restarting the exchange reform is to avoid a large depreciation of the renminbi with the US dollar. However, there has also been a problem of unilateral appreciation expectations, which has brought in the influx of overseas funds. In the past year or so, the central bank has passively invested in buying foreign exchange. More than 3 trillion yuan of the base currency, the money supply M2 increased by 10 trillion yuan." Ding Zhijie said. Experts pointed out that the expectation of appreciation has led to the continuous entry of overseas hot money, which has increased the number of foreign exchange accounts, increased domestic liquidity pressure, and restricted the effectiveness of China's monetary policy. The central bank has had to raise the deposit reserve ratio six times this year and freeze the funds more than 1.8 trillion yuan. The direct intention is to offset the average monthly foreign exchange increase of more than 300 billion yuan. How to get rid of the expectation of unilateral appreciation has always been the lingering shadow of the exchange improvement process. How to get rid of the intensifying unilateral appreciation of the renminbi has become a decision-making layer in the “half-stage phase of the exchange reformâ€. problem. Experts pointed out that increasing exchange rate flexibility is conducive to the formation of bilateral deep fluctuations in exchange rates, increasing the opportunity cost of unilateral arbitrage, and weakening the expectation of appreciation to a certain extent. “The reason why the expectation of RMB appreciation is lingering is mainly because the exchange rate mechanism is rigid and the foreign exchange reserves continue to increase substantially. The risk-free unilateral speculation has caused the expected self-realization.†The Director of the International Payments Department of the Foreign Exchange Bureau Tao wrote that the core of improving the exchange rate mechanism is to further increase the flexibility of the RMB exchange rate and allow the market to play an increasingly important role in the formation of exchange rates. The 2010 annual report released by the SAFE also pointed out that the next phase should steadily promote the reform of the RMB exchange rate formation mechanism. We will focus on improving the floating exchange rate system based on market supply and demand, and gradually increase the flexibility of the RMB exchange rate, and give full play to the role of the exchange rate in arranging foreign exchange resources in both domestic and international markets. Some scholars believe that the means of large-scale appreciation can be used to let the RMB exchange rate rise to a one-off position, so as to solve the problem of expectation of appreciation. "The rise is not rising, and the expectation of appreciation is an important reason for the inflow of hot money. It is one of the measures to weaken the appreciation of appreciation with appreciation." Ding Zhijie pointed out. Zhang Bin also believes that the current small step appreciation is tantamount to distributing invitation letters to speculators. It is not an option to rise to one place at a time. However, some people in the industry pointed out that although China currently allows the exchange rate of the RMB against the US dollar to be 0.5% above the median price, in reality, the fluctuation of the central parity of the RMB against the US dollar in the past year rarely exceeded 0.3%. "The fundamental reason is that the decision-making layer is worried that the floating over-exposure will worsen the current operating conditions of the exporting companies. As such, the possibility of a large appreciation is negligible."
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