亿电竞

finance service
[exclusive] responsible person of the亿电竞 central bank answers questions on RMB exchange rate
Time: 2019/8/6 10:53:02

Source: China亿电竞平台 Financial News Network Author: Li Guohui Release date: 10:26, August 5, 2019

On August 5, the亿电竞 relevant person in charge of the亿电竞 people's Bank of China亿电竞平台 answered the亿电竞 questions raised by the亿电竞 reporter of the亿电竞 financial times on the亿电竞 RMB exchange rate.

Financial Times reporter: why does RMB exchange rate break through 7?

A: under the亿电竞 influence of unilateralism and trade protectionism measures and the亿电竞 expectation of imposing tariffs on China亿电竞平台, the亿电竞 exchange rate of RMB against the亿电竞 US dollar has fallen, breaking through 7 yuan. However, the亿电竞 RMB continues to maintain stability and strength against a basket of currencies, which is a reflection of market supply and demand and fluctuations in the亿电竞 international exchange market.

China亿电竞平台 implements a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies. Market supply and demand play a decisive role in the亿电竞 formation of exchange rate. The亿电竞平台 fluctuation of RMB exchange rate is determined by this mechanism, which is the亿电竞 proper meaning of floating exchange rate system. From the亿电竞 perspective of the亿电竞 global market, as the亿电竞 price comparison between currencies, exchange rate fluctuations are also normal. With fluctuations, the亿电竞 price mechanism can play a role in resource allocation and automatic adjustment. When the亿电竞 exchange rate of RMB is more than $7 in the亿电竞 past, if the亿电竞 exchange rate of RMB is more than RMB $7 over the亿电竞 past 20 years, it will be found that RMB exchange rate has changed by more than RMB $7. It should be noted that the亿电竞 RMB exchange rate "breaks 7", which is not the亿电竞 age, can not return in the亿电竞 past, nor is it a dam. Once it is broken, the亿电竞 flood will pour thousands of miles; "7" is more like the亿电竞 water level of a reservoir, which is higher in the亿电竞 wet season, and will fall again in the亿电竞 dry season, rising and falling, which is normal.

In spite of the亿电竞 recent devaluation of the亿电竞 RMB against the亿电竞 US dollar, historically, the亿电竞 RMB has generally appreciated. In the亿电竞 past 20 years, the亿电竞 nominal effective exchange rate and real effective exchange rate of RMB calculated by the亿电竞 bank for international settlements have both appreciated by about 30%, and the亿电竞 exchange rate of RMB against the亿电竞 US dollar has increased by 20%, making it the亿电竞 most powerful currency among the亿电竞 major international currencies. Since the亿电竞 beginning of this year, RMB has remained stable in the亿电竞 international monetary system. The亿电竞平台 RMB is stronger against a basket of currencies. The亿电竞平台 RMB exchange rate index of CFETS has increased by 0.3%. From the亿电竞 beginning of 2019 to August 2, 2019, the亿电竞 central parity rate of RMB against US dollar depreciated by 0.53%, which was less than the亿电竞 decline of the亿电竞 exchange rate of emerging market currencies such as Korean won, Argentine Peso, Turkish Lira and so on. It is a relatively stable currency among emerging market currencies, and is stronger than reserve currencies such as euro and pound.

Financial Times reporter: what will happen after the亿电竞 RMB exchange rate breaks through 7?

A: the亿电竞 trend of RMB exchange rate depends on fundamentals in the亿电竞 long run. In the亿电竞 short term, market supply and demand and the亿电竞 trend of US dollar will also have a greater impact. The亿电竞平台 market-oriented exchange rate formation mechanism is conducive to play the亿电竞 role of price lever in regulating the亿电竞 balance of supply and demand, and plays the亿电竞 role of "automatic stabilizer" in regulating economy and balance of payments. As a big country, China亿电竞平台 has a complete range of manufacturing industries, a relatively complete industrial system, strong competitiveness of the亿电竞 export sector and moderate dependence on imports. The亿电竞平台 fluctuation of RMB exchange rate has a strong regulatory effect on China亿电竞平台's balance of payments, and the亿电竞 foreign exchange market itself will find a balance.

From the亿电竞 macro level, China亿电竞平台's current economic fundamentals are good, the亿电竞 economic restructuring has achieved positive results, strong growth toughness, the亿电竞 macro leverage ratio remains basically stable, the亿电竞 financial situation is stable, the亿电竞 financial risks are generally controllable, the亿电竞 balance of payments is stable, the亿电竞 cross-border capital flow is generally balanced, and the亿电竞 foreign exchange reserves are sufficient, which provide fundamental support for the亿电竞 RMB exchange rate. Especially under the亿电竞 background that the亿电竞 monetary policies of the亿电竞 developed economies such as the亿电竞 United States and Europe have turned loose, China亿电竞平台 is the亿电竞 only one among the亿电竞 major economies to maintain normal monetary policy. The亿电竞平台 valuation of RMB assets is still low and the亿电竞 stability is correspondingly stronger. China亿电竞平台 is expected to become a "depression" of global capital.

In recent years, the亿电竞 people's Bank of China亿电竞平台 has accumulated rich experience and policy tools in dealing with exchange rate fluctuations, and will continue to innovate and enrich its regulatory toolbox. In view of the亿电竞 possible positive feedback behavior in the亿电竞 foreign exchange market, it is necessary to take necessary and targeted measures to resolutely crack down on short-term speculation and speculation, maintain the亿电竞 stable operation of the亿电竞 foreign exchange market and stabilize market expectations. The亿电竞平台 people's Bank of China亿电竞平台 has the亿电竞 experience, confidence and ability to keep the亿电竞 RMB exchange rate basically stable at a reasonable and balanced level.

Financial Times reporter: what is the亿电竞 impact of RMB exchange rate breaking 7 on enterprises and residents?

A: reform and opening up is China亿电竞平台's basic national policy. Foreign exchange management should adhere to reform and opening up, furthe亿电竞r enhance the亿电竞 facilitation of cross-border trade and investment, and better serve the亿电竞 real economy. This policy orientation will not change after the亿电竞 "break-7" policy.

For ordinary people, in the亿电竞 past 20 years, the亿电竞 RMB has risen more and depreciated less against the亿电竞 US dollar and a basket of currencies. The亿电竞平台 main financial assets of the亿电竞 Chinese people are in the亿电竞 RMB, which is the亿电竞 best protected, and the亿电竞ir purchasing power has steadily increased. All the亿电竞se can be reflected in the亿电竞 fact that people travel abroad, shop abroad, and the亿电竞ir children go to school overseas.

The亿电竞平台 same is true of enterprises. In exchange rate risk aversion, we hope that enterprises will not be exposed to exchange rate risks. At the亿电竞 same time, we should also see that the亿电竞 current RMB exchange rate may eithe亿电竞r depreciate or appreciate. Two way floating is the亿电竞 norm. It is difficult for enterprises, even more professional financial institutions, to predict the亿电竞 trend of the亿电竞 exchange rate.

The亿电竞平台refore, we suggest that we should focus on the亿电竞 entity business and not spend too much energy on judging or speculating on the亿电竞 trend of exchange rate. We should establish the亿电竞 financial concept of "risk neutral". The亿电竞平台 purpose of making foreign exchange derivatives should be to lock in foreign exchange costs, reduce the亿电竞 uncertainty of production and operation, and realize the亿电竞 profit of main business, rathe亿电竞r than the亿电竞 profit of foreign exchange derivatives trading itself.


 
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