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According to Bloomberg reports, as of noon on Friday (Month) In March, the onshore RMB fell by .%, which was the largest decline since the People's Bank of China took action to stabilize the RMB exchange rate.
At that time, the RMB depreciated against the U.S. dollar by .% within three days, which had a serious impact on the global market.
The depreciation of the RMB is mainly due to the decline in exports and the strengthening of the US dollar, which makes investors worry that China will reduce its intervention in the foreign exchange market and tolerate a greater depreciation of the RMB.
However, a report released by the central bank on Thursday (July 2) showed that the strong dollar is coming to an end and the RMB exchange rate will not depreciate much.
Yi Gang, deputy governor of the People's Bank of China, also stated that he would maintain the stability of the RMB exchange rate. However, yuan bears expressed doubts that the Chinese central bank cannot control the direction of the dollar.
Since 2009, the central bank has authorized the China Foreign Exchange Trading Center to publish the central parity rate of the RMB against the US dollar, euro, Japanese yen and Hong Kong dollar every working day. This move is considered to be a means of market intervention by the central bank. Previously, China intervened verbally in the foreign exchange market and then accelerated its intervention in the market. This month, the central bank stated that there was no basis for RMB depreciation and the RMB exchange rate immediately stabilized, raising suspicions that the central bank was directly interfering with the offshore market. However, officials' supportive remarks on the renminbi have not been able to stop the trend of depreciation of the renminbi.
Su Deqin, Asia foreign exchange strategist at Capital Markets, believes that China has been unable to prevent the fate of RMB depreciation in the short term. The real turning point to change this situation should be to carry out structural reforms to increase productivity.
The U.S. dollar index has risen by .% since the end of the month as expectations for a monthly interest rate hike by the Federal Reserve have increased. The pace of the yuan's recent depreciation will slow if short positions increase and policymakers take steps to crack down on speculators, according to a Bloomberg survey of currency traders and analysts this month. The inclusion of the RMB into the basket on March 1 has played a supporting role in supporting the RMB and is expected to attract capital inflows, ease the outflow pressure of cross-border funds, and limit the extent of the RMB's depreciation.
Although China's exports suffered their largest decline in a month in March, the yuan's share of global payments surged to .% in March, the highest level so far this year, according to the Society for Global Interbank Financial Telecommunications. In the past two years, the number of countries with RMB accounting for more than 50% of direct payments to China and Hong Kong has increased, bringing the global total to 10.
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