U.S. dollar index rises, yuan may come under pressure

The U.S. dollar index strengthened again on April 16, breaking through the 106 integer mark and reaching an intraday high of 106.4423, setting a new high since November last year. As of press time, the U.S. dollar index was at 106.85, up 0.02%. According to reporter statistics, last week, the U.S. dollar index rose by 1.67%, the largest weekly increase in the past two years. Since the beginning of this year, the U.S. dollar index has increased by approximately 4.95%.

On April 17, the central parity rate of RMB against the US dollar was 7.1025 yuan, an increase of 3 basis points.

Industry insiders believe that geopolitical tensions and stronger-than-expected U.S. retail sales data in March indicate that the market is currently repricing the Fed's delay in cutting interest rates, which may be the direct reason for the U.S. dollar index's five consecutive daily positives.

The U.S. dollar index continues to rise. What impact will it have on the RMB exchange rate trend?

Feng Lin, director of the research and development department of Oriental Jincheng, said in an interview with reporters that the market has recently expected that the Federal Reserve may postpone an interest rate cut, and the European Central Bank has hinted that it may lower policy interest rates starting in June, which has driven the U.S. dollar index to a nearly five-month high of 106 . Before the Federal Reserve starts cutting interest rates, the U.S. dollar index may continue to remain strong, which means that the RMB exchange rate may still face some passive depreciation pressure. Since the beginning of the year, the U.S. dollar index has risen by nearly 5%, while the RMB exchange rate against the U.S. dollar has depreciated by about 2%, which means that the RMB is appreciating against most other non-U.S. currencies. As the domestic economy continues to rebound, the RMB exchange rate will receive stronger support.

“The domestic economic growth in the first quarter exceeded expectations, and the GDP in the second quarter will continue to accelerate year-on-year. The rebound in foreign trade is expected to continue, coupled with the weakening of cross-border investment fluctuations, China’s external situation will also be stable and good in the future. The current depreciation pressure on the RMB exchange rate Less than last year.”

The chief economist of CITIC Securities clearly believes that the U.S. dollar index is running at a high level and the RMB exchange rate may still be under pressure, but internal factors can still support the RMB exchange rate. Marginal changes in U.S. economic data in the second quarter and changes in the monetary policy orientation of major overseas central banks will be the focus of exchange rate attention.