The Russian-Ukrainian conflict broke out and the global market was engulfed in it. Major global stock markets and various currencies from the euro to the Korean won plummeted. However, the renminbi has become a new safe-haven currency due to its outstanding flexibility.
On February 24, the RMB exchange rate maintained its recent strength. The onshore RMB exchange rate against the U.S. dollar reached a high of 6.3100 yuan per U.S. dollar during the day, hitting a new high since April 25, 2018; the offshore RMB exchange rate reached a high of 1 U.S. dollar to 6.3072 yuan. The RMB hit a new high since April 30, 2018.
"During the Ukraine crisis, the yuan has been trading like a safe-haven currency," said Khoon Goh, head of Asia research at ANZ Banking Group.
A notable manifestation is that even though the Fed's expectations of monetary tightening have been strengthened since the second half of last year, and the US dollar index has gradually risen, the RMB exchange rate has repeatedly staged an independent market that bucked the trend and strengthened; The demand for RMB assets has increased, and the exchange rate of RMB against the US dollar has remained stable at 6.3-6.4. Since the beginning of 2022, the RMB has continued its strength since the second half of last year, and the exchange rate against the US dollar has continued to rise.
From the perspective of the Societe Generale Research macro team, due to the trade surplus in recent years, Chinese domestic companies hold a large amount of foreign exchange earnings. This makes the RMB somewhat immune to external risks. In one bright spot, China's sovereign bonds attracted a record 575.6 billion yuan (91 billion) in inflows last year, with foreign holdings of yuan-denominated bonds rising for the 38th straight month.
"In the short term, the 'safe haven' attribute of RMB assets will support the continued strength of the exchange rate, and the exchange rate of the RMB against the US dollar is expected to hit the 6.30 mark." According to a research report by Industrial Securities.
strong growth
Since the second half of last year, under the influence of the Fed's interest rate hike expectations, the domestic foreign exchange market has experienced a wave of independent market conditions with a stronger dollar and a stronger renminbi.
In October of that year, the renminbi rose above the 6.4 mark. Even in the context of several domestic RRR cuts and interest rate cuts, and the Sino-US interest rate gap continued to narrow, the renminbi exchange rate remained strong.
According to Zhang Meng, a macro and foreign exchange strategist at Barclays, this is due to the sharp increase in the surplus in foreign exchange settlement and sales brought about by the surplus in trade in goods and direct investment since last year.
"China's exports are exceptionally strong, and shorting the RMB is now worth the loss. According to the current carry level (carry), the RMB must fall by 2.9 percent within a year to cover the short-selling cost." Zhang Meng said.
In addition, it is also very important for RMB assets to attract foreign capital inflows that exceed market expectations.
Хотя ФРС неоднократно заявляла о своих ожиданиях повышения процентных ставок, рынок имеет определенную степень скептицизма в отношении того, может ли это быть реализовано на самом деле.
"Looking at the whole year of 2022, we expect that the Fed's rate hike may not be as strong as expected, and the dollar index will return to the downward channel and drop to 90 during the year. Judgment of appreciation to 6.1 in half a year." said Li Chao, chief economist of Zheshang Securities.
It is worth noting that at present, my country's foreign holdings of RMB bonds have increased for 38 consecutive months.
According to data released by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), in January this year, the renminbi's global payment ranking remained at the 4th place in the world, and its proportion rose from 2.70 percent in December last year to 3.20 percent , a record high. The proportion of RMB in global payments has further increased, which is basically consistent with China's high foreign trade boom and the continuous inflow of foreign capital attracted by RMB assets.
The latest data released by CCDC also shows that at the end of January 2022, the denomination of bond custody of foreign institutions in CCDC increased by 50.071 billion yuan to 3.73 trillion yuan, which has been rising for 38 consecutive months. Among them, the custody of treasury bonds by overseas institutions increased by RMB 65.7 billion, and the accumulated treasury bonds held by them amounted to RMB 2.52 trillion.
Foreign institutional investors were also more active in China's bond market in January, with a total of 1,425.1 billion yuan in spot bond transactions, an increase of 53 percent month-on-month.
"When we received foreign exchange, the exchange rate of RMB against the US dollar was still 6.35. Now, when we sell it, it is a loss of tens of thousands of dollars. Our profits are already very meager. But if we don't sell it, we can't hold a lot of money in our hands." A foreign trade company in Wuxi The person in charge said. In fact, in 2021, foreign trade enterprises will face problems such as skyrocketing international bulk commodity prices, the difficulty in finding a single container of "high-priced" shipping containers, and short-term domestic power outages, which will affect the normal operation of some foreign trade factories.
The appreciation of the RMB against the US dollar has become the last straw that overwhelms many small businesses.
For large corporations, the situation is much better. The person in charge of a shipyard in Wuxi said that fluctuations in the RMB exchange rate directly affect the profits of enterprises, so they generally do not settle foreign exchange in real time, but adopt the method of locking foreign exchange for large orders and depositing the US dollars received in small orders in the bank, and waiting until the exchange rate is stable and improving. time to settle the exchange.
However, Ren Hongbin, Vice Minister of China's Ministry of Commerce, said when talking about China's foreign trade situation that foreign trade has reached a "high slope" in 2021, and the achievements have not come easily. The situation facing this year is still complicated and severe, and it is likely to have a "big slope" Kaner".
"In 2022, Chinese foreign trade companies that have entered the "high slope" will also face unprecedented pressure," said Guo Lei, chief economist at GF Securities.
According to the forecast, this year, China's foreign trade development will face more uncertain, unstable and unbalanced factors. Risks such as repeated global epidemics, rising commodity prices, energy shortages, and tight shipping that existed last year still exist. At the same time, domestic economic development is also facing triple pressures of shrinking demand, supply shocks, and weakening expectations, as well as the relatively high foreign trade base last year. Bring pressure to foreign trade this year.
In this regard, on the 24th, the spokesman of the Ministry of Commerce, Gao Feng, said at a regular press conference that in recent years, the two-way fluctuation of the RMB exchange rate has increased, and the exchange rate change has a multi-dimensional impact on the production and operation of foreign economic and trade enterprises, which is related to bargaining power and cost. benefits, etc. In the next step, the Ministry of Commerce will continue to work with relevant departments to further promote financial institutions to enrich and improve their hedging business, and at the same time optimize the RMB cross-border trade settlement environment to help enterprises better adapt to the normal two-way fluctuations in the RMB exchange rate, and continuously improve their ability to resist risks.
