The Central Bank Will Restart Its Exchange Rate Reform For The Full Year &Nbsp, And The Appreciation Of RMB Has Exceeded 5%.

In June 19th last year, the central bank announced the two exchange rate reform.

But appreciation is not the only "achievement" of RMB since the two exchange reform.

Insiders found that over the past year, the RMB exchange rate has shown a "reference to a basket of currencies" rather than a single pegged dollar exchange rate, which means that the RMB exchange rate formation mechanism is gradually moving towards the real "reference to a basket of currencies and a managed floating exchange rate system".

RMB two exchange rate reform continued appreciation process

July 21, 2005, China

From the beginning of 2005 to 2008, the appreciation rate of RMB against the US dollar has reached 18%.

However, in 2008, it began in the United States.

At that time, this was once seen as a "retrogression" of the RMB exchange rate mechanism, but now it is only a small episode in the process of RMB exchange rate reform.

As the crisis gradually dissipated, in June 19, 2010, the central bank announced the reform of the RMB exchange rate formation mechanism and launched the two exchange rate reform.

"Further reform of the RMB exchange rate formation mechanism is based on market supply and demand and reference to a basket of currencies."

When the central bank restarted the reform, it said, "the RMB exchange rate will not be reassessed once and for all. The central bank will continue to dynamically manage and regulate the RMB exchange rate fluctuation in accordance with the floating interval of the announced foreign exchange market, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level."

At present, the trend of RMB exchange rate since the reopening of the exchange rate basically has continued the way of the 2005 exchange rate reform: the RMB has a slight and gradual appreciation against the US dollar, and bilateral volatility has gradually increased.

From June to the end of last year, the RMB exchange rate against the US dollar showed greater volatility.

Central bank statistics show that during this period, the largest appreciation of RMB against the US dollar was 0.43%, close to 0.5% of the fluctuation limit, and the largest depreciation rate reached 0.36%.

Since 2011, the unilateral appreciation of the RMB exchange rate has become more obvious.

In the second half of last year, the RMB appreciated 3% against the US dollar, and as of June 16th, the appreciation of RMB against the US dollar has reached 2.1% this year.

"The appreciation of the renminbi has continued to fluctuate more significantly than it did during the crisis, but it is almost the same as before the crisis."

A joint-stock bank foreign exchange trader summed up the RMB exchange rate since the "two remittance".

"The general direction of appreciation should not change, and the appreciation expectation is still strong."

People from the International Business Department of a state-owned bank said that from the balance of payments surplus, China's economic growth situation and other aspects, the RMB appreciation process will continue to further tend to a balanced exchange rate.

In addition, from the perspective of promoting the internationalization of RMB, the RMB also needs to maintain a strong and relatively stable.

Of course, appreciation is not the only "outcome" since the reform started.

The traders pointed out that over the past year, the normalization and maturity of foreign exchange market pactions have obviously been improved, and all kinds of derivatives pactions are also very active.

A state-owned bank personage said that since the reopening of the exchange reform, the demand for corporate hedging has been significantly enhanced, and the forward selling and selling business of commercial banks has increased significantly, which shows that corporate risk aversion is further improved and is increasingly adapting to the floating exchange rate environment.

From a single peg to the US dollar to a basket of currencies

However, if we only regard the two exchange reform as a simple continuation of the 2005 exchange rate reform, we may not be able to grasp the trend of the RMB exchange rate in the future.

In fact, some experts have found that since the two exchange reform, the biggest progress of the RMB exchange rate is that it has increasingly reflected the reference to a basket of currencies, rather than focusing on the single dollar exchange rate.

Lu Zheng commissar, a senior economist at Xingye Bank, pointed out that since the two exchange reform, the linear trend of the RMB comprehensive exchange rate index compiled by Xingye Bank has been expressed as a horizontal line, which indicates that "the RMB exchange rate is mainly paying attention to the change of the US dollar exchange rate in the past and turning to the relative stability of the exchange rate of a basket of currencies".

The comprehensive RMB exchange rate index of Xingye Bank is a change indicator of the RMB's exchange rate between the 15 currencies, which is used to monitor the change in the value of the renminbi against a basket of currencies.

The 15 currencies are Australian dollar, Argentina pesos, Canadian dollar, new Taiwan dollar, euro, Hong Kong dollar, Indonesian rupee, Japanese yen, won, Malaysia ringgit, Russian rouble, Singapore dollar, Thai baht, pound sterling and US dollar.

"RMB is more stable than a basket of currencies in the past, and it is a major feature since the two exchange reform."

Lu said that this means that judging from the stability of a basket of currencies, the future trend of the RMB exchange rate will be more meaningful than the focus on the US dollar exchange rate changes.

In fact, when the central bank resumed its reform in June last year, it stressed that the RMB exchange rate would not meet the needs of diversification of trade and investment currencies, nor could it reflect the actual level of exchange rate if it only pegged to changes in single currency.

Therefore, in the current pattern of trade and capital diversification, enterprises and residents should not only measure the RMB exchange rate based solely on the US dollar, but should turn from bilateral exchange rate to multilateral exchange rate, and take the change of RMB relative to a basket of currencies to view the level of RMB exchange rate.

"This also marks the further development of the RMB exchange rate to a truly managed floating exchange rate regime with reference to a basket of currencies."

Lu commissar said.