The Expansion Of The RMB Exchange Rate Does Not Mean That It Will Depreciate Significantly.

Wang Tao P, China's chief economist, UBS Securities: the central bank [micro-blog]'s move to expand the floating range of the RMB exchange rate is not surprising.

Policymakers have long raised the need to increase exchange rate flexibility, and last year the central bank has repeatedly considered the expansion of the exchange rate floating range so that the market is somewhat disappointed by the failure to expand the range of exchange rate movements in 2013.

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After a long period of time when the a href= "//www.sjfzxm.com/news/index_cj.asp" > /a > P, the RMB exchange rate against the US dollar unexpectedly became warm and depreciated in mid February.

The market generally believes that the recent fluctuation of exchange rate is the uncertainty of the decision level's intention to increase the trend of the exchange rate between the RMB and the US dollar.

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< p > although expanding the floating rate of exchange rate will increase the two-way fluctuation of the RMB exchange rate, it does not represent the new direction of the trend of exchange rate.

We maintained that the RMB exchange rate against the US dollar remained basically 6.1 in 2014, but we believe that the two-way fluctuation will increase.

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< p > from the economic fundamentals, there is no underestimation of the RMB.

The proportion of China's current account surplus to GDP in 2013 dropped from 10% in 2007 to 2.1%.

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< p > taking into account China's < a href= "//www.sjfzxm.com/news/index_cj.asp" > savings rate < /a > higher, this shows that RMB < a href= "//www.sjfzxm.com/news/index_cj.asp" > exchange rate < /a > has basically been at a fair level.

Although RMB appreciation pressure has been in the past for some time, this is mainly due to the significant spread between the offshore and offshore markets, which has attracted a large number of foreign exchange arbitrage capital.

In view of the relatively weak export performance in the near future, we believe that the renminbi will not continue to appreciate this year.

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At the same time, we do not think that the RMB will depreciate significantly. P

As noted previously, China's current account surplus is still lower than before, but it is still impressive. There is still a large FDI net inflow, and a significant spread between the offshore and offshore markets should still attract capital inflows.

Even if foreign exchange flows out at a certain point in time, China's foreign exchange reserves of more than 3 trillion and 800 billion US dollars will limit the devaluation pressure faced by the RMB.

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< p > in fact, in the announcement, the central bank explicitly pointed out that the RMB exchange rate does not exist on the basis of substantial appreciation or depreciation.

If the exchange rate fluctuates exceptions, the people's Bank of China will also implement the necessary regulation and management to maintain the normal fluctuation of the RMB exchange rate.

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< p > we expect to expand the exchange rate of RMB exchange rate, and the two-way fluctuation of exchange rate will increase this year.

The inflow of "hot money" may fade, and businesses and banks will more effectively manage exchange rate risks in daily pactions.

We believe that this will not directly affect the growth of trade and real economy.

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