Central Bank Is Not "Active Depreciation" SDR Does Not Decide RMB Rise Or Fall.

In the near future, the depreciation of the renminbi may have the demand of the central bank to lift part of the devaluation pressure.

Societe Generale believes that on the one hand, after the G20 and the RMB basket SDR, the pressure on the central bank to maintain a stable currency value has weakened. In addition, the current foreign exchange reserve is US $3 trillion and 170 billion, and it is still likely to be approaching 3 trillion of the "market sensitive level".

After the stable market in September, the RMB has depreciated continuously and substantially since October.

Fortunately, in October 1st, the yuan formally joined the SDR (SDRs).

For a while, all circles began to wonder: is SDR the trigger to trigger the depreciation of the RMB? Where is the future of RMB?

However, it is too early to say that the central bank should "actively depreciate".

"The recent depreciation of the renminbi is more passive, and is closely related to changes in the external market."

Societe Generale believes that there is a high correlation between the central parity of RMB and the dollar index of the previous day, which means that when the US dollar is stronger, the RMB will be devalued to the US dollar. Secondly, since October, with the collective hawks of the Fed officials, the British central bank and the European Central Bank have been superimposed.

The US dollar is stronger than other developed countries' currencies, which obviously pushed up the US dollar index.

In addition, compared with last year's "8. 11" and two rounds of active depreciation in January this year, neither trading volume nor derivatives performance were supported.

First of all, from the volume of pactions, the RMB foreign exchange volume against the US dollar has not risen rapidly.

Second, the price trend of derivatives also points to the market's attitude towards the renminbi, which is different from the central bank's initiative to guide the depreciation period, and there is no panic.

Entering SDR causes RMB to depreciate? "Marketization" is the truth.

In view of this, the mainstream view of the industry is that SDR does not decide the rise or fall of RMB, and the more market-oriented orientation is the main reason for the recent fluctuation of RMB.

The central bank website has reproduced the commentator of China's currency network, saying that although the central parity price fell by 6.7, its depreciation rate was relatively small compared with that of the developed economies and other emerging economies. The RMB exchange rate index calculated by CFETS still appreciated.

Referring to the change of a basket of currencies, it is normal for the RMB to depreciate against the bilateral exchange rate of the US dollar and will continue to float in the future.

In October 18th, the central parity of RMB against the US dollar rebounded, and the offshore RMB yuan closed 6.7393 against the official closing price of the US dollar, up 3 points from the official closing price of the previous trading day.

However, the previous two weeks, the RMB continued downward.

In October 17th, the offshore RMB against the US dollar closed at 6.7396, down 141 points from the official closing price on the previous trading day at 16:30, and continued to refresh its 6 year low.

The mainstream view of the industry is that there is no absolute relationship between the RMB's entry into SDR and the future trend of exchange rate.

The only correlation is that the identity of the SDR basket currency will urge the RMB exchange rate to become more market-oriented.

Zhu Min, former vice president of IMF, said in an interview with reporters: "IMF stresses that since the 189 member states of IMF are willing to accept the renminbi as part of SDR, China's reform of monetary policy, interest rate and exchange rate in the past year must be institutionalized so that it can stand the test of operation and operation."

The implication is that the exchange rate mechanism should be more market-based.

The recent depreciation of the renminbi is also based on the logic of the dollar's passive strength, which is generally believed that the intervention of the central bank is weakened.

Looking back over the past year,

The starting point of the depreciation is the RMB exchange rate reform in August 11, 2015. The central parity of RMB was lowered by 1000 points on that day. After a one-time correction, the RMB began to fluctuate more significantly. The central bank further released the market to the market. At the end of last year, the CFETS basket index was launched, forming a new intermediate pricing mode of "last day's closing price + a basket of currencies".

All this is also the effort that the renminbi is preparing to fight for SDR.

In response, IMF officials said: "the inclusion of RMB in SDR is an important milestone in China's integration into the global financial structure, which has recognized the achievements of China's reform and strengthened its commitment to reform."

To the future, how will the RMB exchange rate evolve? Recently, there have been many voices about the "iron bottom" of the renminbi. However, since the trend of the exchange rate will be more market-oriented, the "iron bottom" itself seems to be a false proposition.

I have to ask, which market factors will affect the trend of RMB in the future?

First, the US dollar trend is undoubtedly the first key.

In the past one or two days, the US dollar has been slightly consolidated. "The short-term adjustment of the US dollar has brought impetus to the rebound of non US currencies and gold.

The end of the US dollar adjustment may depend on the US inflation figures released on Tuesday this Tuesday.

The market expects the CPI rate to rise from 1.1% to 1.5% in September, and the core CPI rate will remain at 2.3%, much higher than expected data, which will enhance the Fed's December rate hike expectations.

Rising again, otherwise, will cause the US dollar to continue to go down. "

FXTM Yue Fu China market analyst Zhong Yue told reporters.

Meanwhile, this Thursday will also usher in the third debate of the US presidential election. If the Democratic Party Hilary expands the advantage of Republican presidential candidate Trump, the risk assets such as the stock market will be supported, and it will also benefit the US dollar. Otherwise, the US dollar and the stock market will fall, and the Japanese yen and gold will be favored.

In addition, the pound, which had little impact on the renminbi, is now the key.

After the euro referendum, the pound fell by nearly 20%, making inflation expectations soar.

Since the speech of British Prime Minister Teresa May triggered concerns about the country's "hard to get rid of Europe", the pound has depreciated 6% against the US dollar in the past two weeks.

The sharp depreciation of the pound has led to a passive appreciation of the dollar, which will also directly affect the exchange rate between the RMB and the US dollar.

China's deputy chief Trading Officer, Zhu Wen Hao, told reporters that the sharp devaluation of the pound led to an increase in worries about inflation and drove investors to reduce expectations that the Bank of England could further reduce interest rates or launch more stimulus measures this year.

However, inflation data released on Tuesday will be the next major event.

"At present, the market expects the CPI rate to rise from 0.6% to 0.9% in September. If inflation is not as strong as expected in the market, it will trigger a conjecture that the British central bank will take further actions, and the pound may weaken further against the US dollar."

Summing up the current exchange rate logic, Zhang Yu said that the renminbi is gradually shifting from a pegging system to a single US dollar exchange rate system to a new system that "weakens a single US exchange rate + emphasizes a basket of exchange rates".

All in all, the future RMB central parity will usher in a broader, more pparent, institutionalized and market-oriented fluctuation, and the importance of a basket of exchange rates will be enhanced.

In the future, there may be several modes: CFETS + + intermediate price; CFETS + + middle price; CFETS + + middle price; CFETS + + middle price.