On the penultimate trading day at the end of the year, the exchange rate of the RMB against the US dollar reached a new high. The spot exchange rate approached 6.06, and the median price was 6.1024. However, the transaction was still relatively deserted at the end of the year. Experts believe that the RMB exchange rate will continue to appreciate as a whole next year, and “exchange rate breaks 6†is a high probability event. It is expected that the exchange rate reform will be slowed down in 2014 and the appreciation trend will remain unchanged.
Continuing the trend of the appreciation of the central parity of the RMB against the US dollar on Friday, yesterday, the median price continued to appreciate by 26 basis points to 6.124, a record high, the 40th record high for the year. With the rise in the middle price, the spot price of the RMB against the US dollar also rose, reaching a record high of 6.0618.
In 2013, the exchange rate of the RMB against the US dollar appreciated by about 3%. According to market participants, the highest price of the year will appear at the end of each year, and this year may be no exception. The market on Monday follows the mid-price appreciation and is expected to continue its appreciation in 2014.
"The RMB exchange rate will continue to appreciate as a whole next year, unless there are two extreme cases, the appreciation will be suspended." Liu Dongliang, a senior analyst in the financial market department of China Merchants Bank, pointed out that "the first is a foreign currency crisis similar to the European debt crisis. First, China’s trade surplus has fallen sharply. But the probability of these two situations is extremely small."
Lian Ping, chief economist of the Bank of Communications, believes that the existence of trade imbalance between China and the United States has put pressure on the renminbi against the US dollar to continue to appreciate. In 2014, the renminbi against the US dollar may continue to maintain a small appreciation trend, and “exchange rate breaks 6†is a high probability event. However, given that the US dollar may weaken in the medium term, the pace of appreciation of the real effective exchange rate of the renminbi may slow down.
The appreciation trend in 2014 is difficult to change
It is worth noting that the current market concerns about the appreciation of the RMB exchange rate mainly come from two aspects. First, the Fed will implement the QE exit plan from January 1, 2014, which may lead to the depreciation of RMB due to the outflow of hot money; Continued appreciation may continue to pressure foreign trade companies.
"The appreciation of the renminbi is not good for export enterprises, it will erode China's export competitiveness, causing export enterprises to close down, which will lead to employment pressure." Liu Dongliang said, "This kind of worry is not unreasonable, but the fact is that since the exchange reform in 2005, The renminbi has appreciated by about 36% against the US dollar. So far, there has not been a large-scale bankruptcy of export enterprises. The trade surplus has risen from $102.1 billion in 2005 to $324.2 billion (as of the first 11 months of this year). It shows that the Chinese export sector is much more resistant to exchange rates than expected."
In terms of hot money flow, Liu Dongliang said, “The outflow of hot money of hundreds of billions of RMB has little impact on China’s economy, and the entry and exit of hot money is still under strict control.†UBS expects China’s current account surplus to remain at GDP in 2014. 2.1%.
Liu Dongliang expects that in 2014, the exchange reform will take a small step and the trend of appreciation will remain unchanged. "Before the market has more pricing power, the momentum of the renminbi's sustained and stable appreciation will not reverse, and the fluctuation range will not be significantly enlarged. At some point in the first quarter of next year, breaking the 6.0 mark will be a high probability event. At the end of next year, the renminbi may rise to the 5.8-5.9 range."
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