The world‘s major currencies were rattled today by unexpected moves from super central banks, causing fluctuations in the foreign exchange market. The renminbi weakened at the opening of the day, with the US dollar against the offshore renminbi rising above 7.24 and the onshore renminbi rising above 7.22, both reaching new highs since November 2023.
The US dollar against the offshore RMB broke through the 7.26 mark, signaling ongoing volatility. The central parity rate of RMB against the US dollar was devalued by the central bank on March 22, adding to the uncertainty in the market.
A senior foreign exchange trader from a Hong Kong investment institution attributed the fluctuations to an unexpected interest rate cut by the Swiss National Bank, which boosted the US dollar. The announcement disrupted the market balance and led to declines in major A-share indexes.
This week is being dubbed a “super central bank week” as central banks in the US, Japan, the UK, Australia, and other countries announce interest rate decisions. Switzerland’s surprise rate cut further added to market uncertainty, with implications for European and US economies.
Despite the short-term fluctuations, experts believe the RMB will continue to rise steadily with strong economic fundamentals and support from macro policies. The global foreign exchange market remains distracted by geopolitical conflicts and other risks that could impact economic growth and financial stability.
Overall, the RMB exchange rate has shown stability amidst global turmoil, with the potential for continued growth in the coming months. As investors navigate these volatile times, caution is advised.