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At around 17:44 yesterday, the offshore RMB/USD exchange rate broke through the 7.10 mark, rising by more than 600 points during the day, hitting a new high since December last year. The onshore RMB/USD exchange rate closed at 7.1385 at 16:30, up 765 basis points from the previous trading day.

Industry insiders said that it is rare for the offshore RMB to be lower than the onshore RMB.This shows that the appreciation of the RMB was more caused by short-term changes in overseas expectations, and the RMB began to show the characteristics of a safe-haven currency.Some experts also pointed out that, considering the overall domestic and international situation, the domestic economy, policies and corporate profit prospects are relatively certain, and RMB assets with low valuations are expected to become a "safe haven" for global funds.

In addition, yesterday the RMB central parity rate against the US dollar was 7.1345. Analysts pointed out that the gap between the spot exchange rate and the central parity rate began to converge, indicating that the current expectation of RMB depreciation began to reverse. Cailianshe reporters noticed that on the investor interaction platform, some listed companies have stated that they will promptly judge the exchange rate trend and settle the exchange rate when the opportunity arises.

Spot exchange rate approaches midpoint

"Starting from last week, with the violent rebound of the Japanese yen exchange rate, the renminbi was also driven to rise in the previous trading days. The main reason was the decline in the US dollar exchange rate," said Zhao Qingming, deputy director of the China Exchange Information Technology Research Institute. He believes that non-US currencies have strengthened to varying degrees recently, and the renminbi, as a major non-US currency, has also changed with the trend.

Jerry Chen, a senior analyst at Forex Capital, told Cailianshe reporters:The liquidation of yen carry trades has driven the yen up sharply. The maximum increase of the yen against the US dollar has been close to 14%, which has also boosted the renminbi, which is also a low-interest currency.At the same time, the recent break of the US dollar index has led Chinese exporters to start converting foreign exchange, which has supported the continued strengthening of the RMB. The RMB has soared by nearly 1,500 points in two weeks.

As of 13:00 Beijing time on August 5, the USD/RMB exchange rate was 7.13, and the USD/CNH exchange rate was 7.12. On the same day, the RMB/USD central parity rate was 7.1345. Jerry Chen said that this also means that the gap between the spot exchange rate and the central parity rate has begun to converge, indicating that the depreciation expectations have begun to reverse.

However, some industry insiders have doubts about the sustainability of depreciation expectations. "Some domestic and foreign market players have indeed changed their expectations recently, mainly wondering whether the appreciation will continue, but it may be too early to talk about the reversal of depreciation expectations," foreign exchange expert Zhang Tianlai told Cailianshe reporters.

Zhang Tianlai believes thatThe phenomenon that the offshore RMB was lower than the onshore RMB yesterday is a relatively rare situation."The strong offshore RMB bullishness shows that this time the RMB appreciation is more caused by short-term changes in overseas expectations, and the RMB has also begun to show characteristics of a safe-haven currency."

"The market expects that the Fed's pace of interest rate cuts has fallen behind expectations. Originally, the Fed's interest rate meeting in July only hinted that there would be only one interest rate cut in September this year. But now, a rate cut in September is highly likely, and the probability of multiple rate cuts in the remaining interest rate meetings this year is also soaring," said Wang Xinyuan, a senior foreign exchange analyst at LianLian International. He predicted that with the weakening of interest rate support, the US dollar will weaken and the renminbi will usher in a relatively large appreciation. The US dollar is also expected to be relatively weak in the future.

Is it time to convert RMB appreciation into foreign exchange?

Cailianshe reporters noticed that the "RMB exchange rate" has also become a focus of attention for companies and investors recently. On the interactive platform, many investors asked listed companies whether they have taken relevant measures to deal with exchange rate risks, especially when the RMB appreciates against the US dollar.

Many listed companies have stated that they will settle foreign exchange in a timely manner according to market conditions, which also shows that some companies' expectations of depreciation are changing.

for exampleKaineng HealthIt said that the company's export revenue accounts for more than 60%, and the settlement currencies are US dollars and euros, and are mainly deposited domestically. Taking into account the exchange rate and deposit and loan interest rate differences in recent years, the company chose to deposit foreign currency, while borrowing RMB domestically for daily operations, and timely settle foreign exchange based on market conditions and liquidity considerations.China ChemicalHe said that in terms of foreign exchange management, the company first adopted the coordinated management of foreign exchange funds and matched foreign currency assets and liabilities; for the existing US dollar and euro funds, it promptly analyzed the exchange rate trends and settled the currency when the opportunity arose.

Wang Xinyuan believes thatForeign exchange market has a slightly greater impact on cross-border business customers who are engaged in foreign exchange settlementIf the RMB appreciates after receiving payment in foreign currencies such as US dollars, the value of the foreign currency on hand will decrease, resulting in losses from foreign exchange fluctuations. "Related companies can choose various foreign exchange products to lock in future exchange rates for hedging, reducing and hedging the impact of exchange rate fluctuations."

RMB assets are expected to become a "safe haven" for global funds

"The linkage between the RMB and emerging market currencies such as the Japanese yen has indeed increased. This is mainly due to the continuous integration of my country's economy and finance into the world. On the one hand, my country has actively promoted the high-level opening up of the financial industry, and cross-border financial business has developed rapidly. On the other hand, my country's foreign trade has become more diversified and the pace of RMB internationalization has accelerated."China Everbright BankZhou Maohua from the Financial Markets Department told Cailianshe reporters that the renminbi is being used increasingly frequently in cross-border settlement and investment and financing, and its linkage with other currencies will be further enhanced.

Recently, the International Monetary Institute of Renminbi's "RMB Internationalization Report 2024" (hereinafter referred to as the "Report") uses the RMB Internationalization Index (RII) to dynamically track the development of RMB nationalization. The larger the RII value, the higher the level of RMB internationalization. The results show that RII continues to maintain a long-term upward trend. Compared with the performance of other major international currencies during the same period, the internationalization of RMB has shown a strong momentum of development.

Specifically, the report points out that the RII values ​​at the end of the four quarters in 2023 will be 5.21, 7.13, 6.42 and 6.32 respectively, and the quarterly average for the whole year will be 6.27, a year-on-year increase of 22.9%, continuing the long-term upward trend. As of the end of 2023, the internationalization indexes of the US dollar, euro, pound sterling and yen will be 51.52, 25.03, 3.76 and 4.40 respectively. In the past five years, the average annual compound growth rates of the internationalization indexes of the US dollar, euro, pound sterling, yen and RMB have been -0.23%, -1.34%, -2.65%, 0.22% and 16.56% respectively.

Taking into account the slowdown in developed economies, pressure on corporate earnings prospects, geopolitical conflicts, etc., the volatility of overseas markets has increased. In addition, the overall high level of overseas asset stocks has increased the risk relative to the return. Zhou Maohua believes thatThe domestic economy, policies and corporate profit prospects are relatively certain, and RMB assets with low valuations are expected to become a "safe haven" for global funds.