After The Interest Rate Cut, The RMB Weakened Against The US Dollar.

After the central bank announced the interest rate cut again, the spot exchange rate of RMB against the US dollar weakened on schedule as of March 2nd, and hit a new 28 month low. However, restricted by the fluctuation range of the day, the spot exchange rate of RMB continued to consolidate near the "limit price".

Market participants believe that the pressure of short-term devaluation of the renminbi needs to be released, but the long-term depreciation space is limited.

On the 2 day, the central parity of RMB against the US dollar was 6.1513, down 38 basis points from the previous trading day.

Some traders said that the decline in the central parity of RMB reflected the impact of the interest rate cut, but the adjustment is still not obvious, so it is difficult to change the current situation.

Disk display,

Enquiry trading opened 34 basis points at 6.2730, and the whole day fluctuated around the opening price, closing at 6.2730, or 34 basis points.

On the same day, the spot exchange rate of the renminbi was at a minimum of 6.2740, and its relative middle price decreased by 1.995%, still very close to 2% of the fluctuation limit.

This indicates that the downward trend of domestic economic growth and the continued relaxation of monetary policy make the cyclical differences between China and the US in economic fundamentals and monetary policy become increasingly significant, forming a pressure on the RMB to depreciate against the US dollar in the short term.

From the spot and forward prices, the short-term market has a strong devaluation expectation for the RMB.

On the 2 day offshore offshore non deliverable foreign exchange market, the 1 year RMB traded on the US dollar NDF contract at around 6.41, reflecting that the overseas market expects the RMB spot exchange rate to depreciate by about 2.2% in the next 1 years.

But at the same time, due to the small adjustment of the central bank's central price, the RMB's spot exchange rate and the middle price deviate from the 2% position, which is difficult to further descend, resulting in the short term RMB devaluation pressure not fully released, resulting in the cooling of institutional enthusiasm and the sharp reduction in market pactions.

Traders pointed out that there are two ways to change the current situation of inactive foreign exchange trading in the RMB against the US dollar: first, a sharp reduction in the middle price, which will expand the space for spot market pactions; two, expectation.

There has been a marked improvement or a sharp fall in the US dollar, changing the expectation that the renminbi will depreciate against the US dollar.

In the short term, the middle price remains the key.

The source pointed out that the renminbi will still have room for depreciation in the future against the US dollar. But considering the need to guard against massive capital outflow and promoting internationalization, and avoiding the pressure of external public opinion, it is unlikely that there will be a deep depreciation. 6.35-6.40 may become the low point of the current round of devaluation.