RMB Exchange Rate Against US Dollar Rises By 2.26% and 2.40% in November
The RMB exchange rate against the US dollar has been on the rise since November, showing an increase of 2.26% onshore and 2.40% offshore during the month. According to Wind data, as of 16:30 on November 28, the onshore and offshore RMB exchange rates against the US dollar were reported at 7.1539 and 7.1587 respectively.
Ming Ming, chief economist of CITIC Securities, mentioned in an interview with a reporter from Securities Daily that the recent trend of the RMB exchange rate is influenced by both domestic and foreign factors. Domestically, economic data in October indicated marginal improvement in the domestic economy, which, coupled with policy efforts and seasonal demand for foreign exchange settlements, provided support for the RMB. On the foreign front, weak U.S. economic data in October, a fall in the U.S. dollar index, and narrowed Sino-U.S. interest rate spreads have eased external pressure on the RMB.
The National Bureau of Statistics released data on November 15 showing a 7.6% year-on-year increase in total retail sales of consumer goods in October, a 4.6% year-on-year increase in the added value of national industrial enterprises above designated size, and a 0.9% year-on-year growth in the total import and export of goods. These figures suggest a recovering national economy and overall stability.
Everbright Securities’ research report highlighted two major driving forces for the RMB’s appreciation in November. First, the 10-year U.S. bond yields fell rapidly while the interest rate gap between China and the United States narrowed. Second, U.S. retail sales and inflation data cooled in October, confirming the expected convergence of the Sino-U.S. economic cycle.
Looking ahead, Chief Economist Mingming believes that the RMB may return to a two-way fluctuation trend in the short term and stabilize and recover in the medium to long term as the domestic economy continues to improve and recover.
Li Liuyang, chief analyst of foreign exchange research at CICC Research Department, mentioned that the RMB has a tendency to appreciate during November, December, and January due to seasonal factors, and further weakening of the US dollar in December cannot be ruled out.
The Central Bank published a column in November emphasizing the importance of maintaining the soundness of monetary policy and creating a good monetary and financial environment. Additionally, the bank stated that it will adhere to a managed floating exchange rate system based on market supply and demand and will resolutely prevent the risk of exchange rate overshooting.
Senior researcher Wang Youxin of the Bank of China Research Institute advised enterprises to take comprehensive measures to deal with exchange rate fluctuations, including adjusting asset and liability structures, using financial derivatives instruments for hedging, and adopting RMB pricing and settlement methods to avoid foreign exchange risks at the source.
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