On July 1, data from the China Foreign Exchange Trading Center showed that the central parity rate of the RMB against the U.S. dollar was reported at 6.6863, an increase of 251 basis points, and a cumulative increase of 137 basis points this week. The central parity of the previous trading day was 6.7114, the closing price of the onshore RMB was 6.6943 at 16:30, and it was 6.7001 in the evening trading at 23:30.
The dollar index fell on the 30th. The dollar index, which measures the greenback against six major currencies, fell 0.40% on the day to close at 104.6860 in late trading.
On July 1, the central bank announced that in order to maintain reasonable and sufficient liquidity in the banking system, on July 1, a 7-day reverse repurchase operation of 10 billion yuan was carried out by way of interest rate bidding, and the winning rate was 2.10%.
Wind data shows that the 60 billion yuan reverse repurchase expired today, so a net 50 billion yuan was withdrawn that day, and a net 300 billion yuan was invested this week.
Societe Generale Research predicts that in the second half of 2022, before the Sino-US inventory cycle is dislocated, monetary policies are differentiated, and cross-border capital outflows are not reversed, the RMB will not be repaired. When encountering a pullback in the US dollar, periodic inflows of foreign capital, counter-cyclical adjustments by the central bank, or tariff reductions between China and the United States, the RMB will rebound. Considering that the US dollar is “grinding its top”, the adjustment of the RMB against the US dollar may be limited in the future; after the US dollar index peaks, the appreciation momentum of non-US currencies will be highlighted and promote the effective exchange rate of the RMB to continue to repair overvalued.