Line Up Foreign Exchange Settlement! The Yuan Has Exploded
On September 19, the onshore RMB opened at 7.1048 against the US dollar, and then rose above 7.10, 7.09, 7.08 and 7.07. At the time of writing, the onshore RMB exchange rate against the US dollar was 7.0638, up more than 400 points in the day.
In terms of offshore renminbi, the offshore renminbi exchange rate jumped to near the 7.08 mark this morning before easing slightly. As of press time, the offshore RMB exchange rate against the US dollar was 7.0636, with a daily fluctuation of more than 500 points.
After recovering slightly in the morning, the dollar index continued to dip and at the time of writing was below the 101 level at 100.7.
NEWS
Fed cuts interest rates
According to CCTV news, after the end of the two-day monetary policy meeting, the US Federal Reserve Board announced on September 18 local time that the target range of the federal funds rate was lowered by 50 basis points to the level of 4.75% to 5.00%
This is the Federal Reserve's first interest rate cut since March 2020, and it also marks the shift of monetary policy from a tightening cycle to an easing cycle.
At a press conference held after the meeting, Fed Chairman Jerome Powell called the 50 basis point rate cut a "strong action" and said the Fed did not think it was "slow to cut rates," but that it was a "timely move."
NEWS
The trend of RMB appreciation is obvious
According to Beijing Business Daily, this round of RMB exchange rate appreciation, and the Federal Reserve interest rate cut expectations have no small relationship.
"The market has increased bets on interest rate cut expectations, and the rapid retreat of the dollar and interest rates has pushed up non-US currencies such as the renminbi." Zhou Maohua, a macro researcher in the financial markets department of Everbright Bank, explained.
On the one hand, the risk of the US election and the increased volatility of financial markets in Europe and the US may promote the gradual flow of global funds to assets with solid fundamentals and low valuations.
On the other hand, the domestic economy is in a recovery cycle, corporate profits are improving, and the policy environment is friendly, etc. RMB is expected to become a safe haven for global funds, and the market's bullish sentiment on RMB and assets is gradually accumulating.
In response to the appreciation of the RMB exchange rate, Yang Haiping, a researcher at the Securities and Futures Institute of the Central University of Finance and Economics, also mentioned two boosting factors: The funds that had previously delayed the settlement of foreign exchange began to settle under the expectation of RMB appreciation, which became the factor promoting the appreciation; International institutions in response to the Federal Reserve rate cut and possible financial market volatility, some foreign capital inflows.
