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phoenix finance news at 2:00 a.m. beijing time on september 19, the federal reserve officially announced a 50 basis point interest rate cut, lowering the target range of the federal funds rate from 5.25% to 5.5% to 4.75% to 5%.

the market expects that the federal reserve's continued interest rate cut cycle will further alleviate the pressure of foreign exchange outflows on the rmb exchange rate caused by interest rate differentials and open up domestic monetary policy space.

previously, stephen jen, the originator of the "dollar smile theory" and ceo of eurizon slj capital, a well-known british hedge fund, predicted that as the federal reserve cuts interest rates, chinese companies may choose to sell up to $1 trillion in dollar-denominated assets, which may significantly push up the appreciation of the rmb against the us dollar by about 10%.

on the eve of the rate cut, hu jie, a professor at the shanghai advanced institute of finance, shanghai jiao tong university, told phoenix finance that there are indeed different interpretations and views on the specific scale of china's overseas funds. "how much money china has overseas is indeed a complex issue, and different people may come to different conclusions based on different data and perspectives," hu jie emphasized.

talking about the possible impact of the us interest rate cut on china's capital flow, hu jie further analyzed: "from the perspective of interest rate differentials, the us interest rate cut will undoubtedly weaken the attractiveness of overseas investment, especially for those funds that originally stayed overseas based on high interest rate differentials and expectations of rmb depreciation. after the us interest rate cut, these funds will theoretically have a stronger motivation to flow back to china because the relative returns in china have become more attractive."

however, hu jie also pointed out the practical challenges facing capital repatriation: "although the narrowing of interest rate spreads is conducive to capital repatriation, the key lies in whether these funds can find suitable investment channels after returning to china. at present, the attractiveness of real estate and stock markets, as traditional investment hotspots, seems to have weakened. the real estate market is facing regulatory pressure, while the stock market is in a relatively volatile period, which makes investors more cautious in making decisions."

hu jie pointed out, "therefore, although the us dollar interest rate cut may create favorable conditions for capital repatriation, the actual capital flow situation still needs to consider many factors, including the domestic economic environment, policy orientation and changes in the international market. at this stage, i am not so optimistic about the scale and speed of capital repatriation."