On the shore, the official closing price of RMB against the US dollar was reported at 6.9560, which was 82 points lower than the official closing price of the previous day. It fell 110 points from the previous day’s close, reaching a new low of nearly a decade and a half.
Lianxun Securities: The renminbi remains flexible and more conducive to the economy
The depreciation pressure faced by the renminbi mainly comes from two aspects: First, the dollar has clearly strengthened recently. Since late September, the US dollar index has risen from 93.8 to around 96.7, with a monthly increase of nearly 3%. The Fed steadily continued to raise interest rates and increased risk aversion to boost the dollar. Recently, the Fed Vice Chairman said that the Fed did not change the established policy of gradually raising interest rates because of the large fluctuations in the US stock market. The offshore RMB exchange rate fell below 6.97 on October 26, approaching the integer mark of 7.
Second, the domestic economy is facing downward pressure, and the entire monetary policy tends to relax. Since the second quarter, the central bank has repeatedly lowered the standard. Judging from the economic situation in the third quarter, it is likely to continue to decline, and the intensity of monetary policy relaxation may increase in the future.
It is not too important for the renminbi to break through. The renminbi is more flexible, but it is more conducive to policies that focus on the domestic economy. From the horizontal comparison of national currencies, the RMB exchange rate depreciation is around 6% this year, which is significantly smaller than that of many other emerging market countries. In the past years, domestic monetary policy has been restrained to a certain extent in order to stabilize the exchange rate. The main contradiction at the moment is that the domestic economy is declining. Monetary policy can be more free from the shackles of the exchange rate, so that the exchange rate can maintain a better elasticity, which is undoubtedly more favorable to the current domestic economy. In the future, if the economic downturn is contained, the internal depreciation pressure of the renminbi will naturally ease.