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Offshore Renminbi Sentiment Hit 10 Month High

2014/5/5 22:22:00 27

Offshore Renminbi Exchange Rate Financial Market

In April 25th, the one-year RMB put option rose to 2.5% on the call premium rate, a record high since July 5, 2013. Bloomberg said that the people's Bank of China (PBC) has suppressed the offshore renminbi to stimulate the Chinese economy. This year, the "a href=" //www.sjfzxm.com/news/index_c.asp "offshore RMB /a" has fallen by 3.1%. 
The data released by the General Administration of Customs in early March, P, showed a sharp decrease of 18.1% in February compared with the previous year, much lower than expected growth of 6.8%, and the second largest trade deficit in the history of $22 billion 980 million in that month. In March 17th, the people's Bank of China extended the RMB to us dollar < a href= "//www.sjfzxm.com/news/index_c.asp" > spot exchange rate < /a > floating zone from 1% to 2%. Bloomberg said at least four banks immediately lowered the target price of the onshore RMB. 
 last Wednesday, the Taiwan a href= "//www.sjfzxm.com/news/index_c.asp" > the financial supervision and Administration Commission < /a > said it would punish three other banks that sell one-year TRF (target redemption forward contracts). Morgan Stanley's latest report believes that the Taiwan monetary authority will punish Yongfeng bank and so on, which has the opportunity to cause the market to buy back the demand for the dollar, thus seeing more dollars / offshore RMB. 
 Morgan Kendrick, director of Asian monetary and interest rates at Geoffrey Stanley, told Bloomberg telephone interview: 
 the problem faced by banks in Taiwan now is to sell products to customers when they do not understand the product itself. 
 some structural products are likely to disappear from banks. 
Craig Chan, a former yen strategist at P Nomura Holdings (Asia) believes that if the offshore renminbi spanaction is in turmoil, the Chinese government will try to stabilize the market. 
In May 2nd, he responded to Bloomberg's interview by mail: P.
 if the RMB exchange rate fall is caused by capital outflow, then the situation is worrisome. 
 in view of the large amount of speculative capital in the market, if the hot money really escapes, it will cause turbulence in all (local) markets. 
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At present, on the question of where the RMB exchange rate should go from, P has the view that China's fiscal and financial risks are controllable, foreign exchange reserves are abundant, and the ability to resist external shocks is strong. However, combined with the previous analysis, we have noticed that since 2011, the US dollar has entered a new appreciation cycle, and the story of currency crisis has indeed been staged again in Latin America and some emerging markets. Can China escape the impact of US dollar cyclical fluctuations? This requires us to clearly understand the current situation. 
 in the stage of financial capitalism, the key of global capital is not the total quantity but the flow direction. Once the US Dollar gets stronger, the money will flow back to the US. This is why in the past dollar appreciation process, emerging economies are prone to the main cause of financial crisis caused by capital flight. 
Once the strong trend of US dollar P is formed, it will cause changes in the flow of international capital, not just American capital. This is prone to severe shocks to countries that have attracted international capital in particular, especially emerging economies, in the period of the dollar depreciation cycle. It can be seen that since 2011, many emerging economies have largely withdrawn capital and devalued currencies in varying degrees. 
 maintaining the basic stability of the RMB exchange rate and adhering to the strategy of "steadily rising" may be the most important strategic layout to prevent the outflow of funds. Of course, the RMB exchange rate policy also needs to be taken care of by such a deterministic and trend policy. The recent devaluation of the RMB is a very beautiful way of blocking. On the one hand, it promotes the market to break the expectation of unilateral appreciation. On the one hand, it is conducive to the withdrawal of some speculative accounts. In addition, the further expansion of the exchange rate will help to enhance the floating elasticity of RMB exchange rate and increase the uncertainty of risk and return of speculative capital, which will help to form the RMB exchange rate market mechanism and combat speculative capital.