*** Expectations of slight appreciation are strengthened

At the five-year anniversary of the reform of the RMB exchange rate formation mechanism, the cumulative appreciation of the US dollar was 22%. The exchange rate of the renminbi has always appreciated slightly, except for a one-off appreciation of about 2% at the beginning of the exchange reform. This is in line with China’s national conditions: News from the third phase of the Canton Fair shows that the current profitability of the apparel industry, which solves many people’s employment, is only between 3% and 5%. A large appreciation of the yuan will result in many SMEs Profitable.

Current market conditions in the offshore forward market show that the RMB will appreciate by 3.4% in the next 12 months, indicating that the slight appreciation of the RMB is widely expected by most people. A few days ago, when Li Daokui, a member of the Central Bank’s Monetary Policy Committee, attended the academic forum held in Beijing, he reinforced this expectation: “The rate of appreciation of the renminbi exchange rate should be based on the actual conditions of the country rather than external pressure, so as to prevent export enterprises from closing down. Judging from historical experience, a 3%-5% appreciation of the renminbi per year is a controllable level.” This is a relatively rare high-level person from the Chinese monetary authorities to specifically talk about the scope of appreciation of the RMB exchange rate.

Based on this, Chinese and overseas industry sources predict that the maximum appreciation of the renminbi this year will not exceed 5%. Since the outbreak of the global financial crisis in 2008, the exchange rate between China and the U.S. dollar has been relatively stable, but since mid-June this year, it has returned to the managed floating exchange rate system. Since then, the appreciation of the renminbi has been around 2.1%.