The benefits of the RRR cut continued to grow, and the RMB exchange rate strengthened in response.
On January 25, the onshore and offshore RMB exchange rates both rose above the 7.16 mark during the session, reaching their highest levels of 7.1561 and 7.1565 respectively as of press time. Catalyzed by favorable policies, the onshore and offshore RMB exchange rates have appreciated by more than 300 points in the past two days.
The People's Bank of China issued an announcement on January 24 that starting from February 5, 2024, the deposit reserve ratio of financial institutions will be reduced by 0.5 percentage points (excluding financial institutions that have implemented a 5% deposit reserve ratio). At the same time, starting from January 25, the re-loan to support agriculture, re-loan to support small businesses, and re-discount interest rates were reduced by 0.25 percentage points each.
Analysts believe that the RRR and interest rate cuts at the beginning of the year reflect the forward-looking nature of monetary policy and help strengthen the foundation for exchange rate stability.
An institutional source told reporters that in the context of still uncertainties in the internal and external environment, the central bank chose to lower the required reserve ratio at the beginning of the year this time, which reflects that monetary policy continues to make counter-cyclical adjustments and makes early efforts to consolidate the recovery of the national economy. This will help to continuously improve macroeconomic fundamentals, enhance the confidence of market participants, and lay a solid foundation for maintaining the stability of the RMB exchange rate.
The RRR and interest rate cuts at the beginning of the year will benefit the exchange rate from the perspective of stabilizing economic fundamentals. Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, said that this RRR cut did not change the prudent tone of monetary policy, indicating that the People's Bank of China has increased its support for the real economy, boosted market confidence, and improved the prospects for economic recovery.
Lian Ping, chairman of the China Chief Economist Forum, said that under the current situation, prudent monetary policy remains moderately loose, and the comprehensive use of reserve requirement ratio cuts, interest rate cuts and structural policy tools can exert a positive impact in many aspects. If the loan interest rate falls, it can reduce the financing costs of enterprises, reduce the burden on enterprises, and improve the financing efficiency of enterprises, thereby better meeting the medium and long-term development needs of enterprises.
Reducing external pressure will also benefit the stability of the RMB exchange rate. Currently, the market generally expects that developed economies will gradually shift to an interest rate cutting cycle. The Research Department of CICC believes that from the perspective of external constraints, as expectations for an interest rate cut by the Federal Reserve increase after November 2023, the RMB exchange rate will appreciate against the US dollar, and the external pressure for downward interest rates in my country will be reduced.
Since the beginning of the year, the RMB exchange rate has continued to maintain a steady trend, cross-border capital flows have been stable and orderly, the supply and demand in the foreign exchange market are basically balanced, and expectations are generally stable. The RMB exchange rate has continued its stable trend since the second half of 2023. On January 25, the central parity rate of the RMB against the US dollar was 7.1044, basically the same as the end of the previous year.
"The RMB exchange rate will continue to remain basically stable at a reasonable equilibrium level in 2024." Pan Gongsheng, Governor of the People's Bank of China, said at a press conference of the State Council Information Office on January 24 that the market expects the momentum of US dollar appreciation to weaken, and the Sino-US monetary policy cycle The dislocation is expected to be improved, which will promote the convergence of Sino-US interest rate differentials and help the RMB exchange rate and cross-border capital flows become more stable and balanced.
Pan Gongsheng also emphasized that the flexibility of the RMB exchange rate should be maintained and the exchange rate should play its role as an automatic stabilizer in regulating macroeconomics and the balance of payments. We should insist that the exchange rate is mainly determined by the market, while adhering to bottom-line thinking, enriching response tools, preventing the formation of unilateral consensus expectations and self-reinforcement, and maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level.
简体中文
ภาษาไทย
繁體中文
Indonesia
2024-01-26
477
