RMB'S Strong Immunity Against US Dollar

Morgan chase (JP Morgan) resident

Daniel Hui, a strategist, points out that even if the US Dollar gets stronger, the renminbi will remain stable.

Daniel Hui wrote in the Market Research Report:

Although the strength of the US dollar index has recently suppressed Asian currencies, the RMB against the US dollar seems to be immune to this environment, which is similar to the rise of the US dollar after last year's FED hinted that it would withdraw from quantitative easing (QE).

The record of China's trade surplus has consolidated the strong foundation of the renminbi.

But at the same time, data in August showed that mainland Chinese enterprises bought a net $16 billion, continuing the recent trend of lifting the US dollar short positions.

Even so, although the amount of foreign exchange purchased by these enterprises is huge, the capital inflow of trade surplus can be completely covered, and the latter will further enlarge with seasonal factors before the end of the year.

These factors will keep the renminbi in a relatively favorable position, and the exchange rate is expected to follow the fundamentals gradually. However, the pace of growth can not cause the concern of the policymakers.

You bet,

Sudden outflow is a major concern of the Central Bank of China. This is also probably the reason why the central bank did not adjust the US dollar index at the time of determining the middle price. Instead, the central parity level was pushed back to the bottom area of the recent fluctuation range.

We still hold USD / RMB for 3 months to NDF, because the positive interest rate and the intermediate price minimize the upward risk.

At the same time, Hongkong's offshore dollar / RMB price is put on a put option of 6.19 yuan, and the difference of the bid price is 6.35-6.50.

Latest quotation

Tuesday

The median price against the US dollar was 6.1470, up 15 points from Monday.

On the spot exchange rate, the RMB in the inter-bank foreign exchange market was slightly lower than the US dollar at 6.1420, and after a short intruded 6.1430 intraday low point, the concussion rose and the market closed at 6.1378, rising 26 points.

Traders said that the rise in the intermediate price and the HSBC China's PMI initial value announced in the early morning were favorable for the RMB exchange rate trend, but the market direction was still unclear, the trading was rather light, and the volatility of the RMB exchange rate was also very limited.

The latest figures show that HSBC's China Manufacturing Purchasing Managers Index (PMI) edged back to 50.5 in early September, which is the fourth consecutive month in the upper and lower watershed.

Analysts pointed out that the leading indicators of the economy should be better to enhance market confidence in the economic growth prospects. However, the substantial improvement of the economy remains to be seen after the expected decline in August.

At the same time, considering the stable surplus trade surplus still has strong support for the RMB exchange rate, the US dollar is in short term consolidation, and there may be inertia buying foreign exchange before eleven long holidays.