after the fed cut interest rates, the rmb exploded!
2024-09-21
한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina
on september 18, local time, the u.s. federal reserve (hereinafter referred to as the fed) announced that it would lower the target range of the federal funds rate by 50 basis points to a level between 4.75% and 5.00%. this is the first interest rate cut by the fed in four years.
in addition, according to the federal reserve's forecast,the us federal funds rate will reach 4.4% by the end of this year, which is the target range of 4.25% to 4.5%,it will drop to 3.4% by 2025 and is expected to drop to 2.9% by 2026。
analysts believe that historically, unless faced with a major economic crisis, the federal reserve rarely cuts interest rates by 50 basis points when starting a new rate cut cycle.the fed’s rate cut, which was more aggressive than expected, may be aimed at achieving a “soft landing” for the economy and offsetting the risk of a “stalling” in economic activity.。
the research team of minsheng bank believes that, considering the current economic environment and the specific market performance of various types of assets,it is expected that the us bond yield will continue to decline, the us dollar index may fluctuate and weaken, the us stock market as a whole still has room to fall, the gold price will continue to fluctuate upward, the crude oil price will remain weak, the pressure on the depreciation of the rmb exchange rate will be further reduced, and the 10y chinese bond yield has room to fall.。
in addition to the federal reserve, several central banks have recently announced interest rate cuts, and global monetary policies have gradually turned to easing. in early august, the bank of england lowered its benchmark interest rate by 25 basis points to 5%; on september 4, the bank of canada announced a 25 basis point cut in its benchmark interest rate to 4.25%; the european central bank announced a second interest rate cut on september 12; on september 18, the indonesian central bank lowered its key interest rate by 25 basis points to 6%, which is expected to be 6.25%.
what is noteworthy is that in the afternoon of september 19, the rmb exchange rate against the us dollar rose. wind data showsas of 14:50 on the same day, the onshore rmb exchange rate against the us dollar was 7.0610 yuan, up 283 basis points from the previous closing price. the highest intraday price was 7.0606 yuan, a new high since july 2023.。the offshore rmb exchange rate against the u.s. dollar was 7.0619 yuan, up 333 basis points from the previous closing price. the highest intraday price was 7.0606 yuan, also a new high since july 2023.
however, judging from the federal reserve’s previous interest rate cut cycles, the rmb exchange rate trend has not shown any obvious regularity.
the research team of minsheng bank said that after the fed’s interest rate cut “landed”,the pressure of rmb depreciation will be further reduced. it is expected that the exchange rate of usd/rmb will fluctuate in both directions within the range of 7 to 7.2 for most of the time this year.。
regarding the rmb exchange rate, zhou maohua, a macro researcher at the financial markets department of china everbright bank, said that the fed's interest rate cut will further boost the rmb exchange rate and the performance of rmb assets. in addition, china's long-term economic development prospects and the current attractive valuation of rmb assets are expected to attract global capital inflows.
huatai securities also released a research report saying that overall, the fed started the interest rate cut cycle with 50 basis points, catching up with the pace of interest rate cuts by other major central banks; the 50 basis point interest rate cut did not cause market panic;the fed is expected to continue to cut interest rates, but the 50 basis point "step" may not be the normlooking ahead, it is expected that the federal reserve will continue to push for interest rate cuts in the future.the cumulative rate cuts this year are expected to reach 100 to 125 basis points (the remaining 50 to 75 basis points); the federal reserve's continued interest rate cut cycle is expected to further alleviate the pressure of foreign exchange outflows caused by interest rate differentials on the rmb exchange rate and open up domestic monetary policy space.
yang delong, chief economist of qianhai kaiyuan fund, said that the federal reserve has entered a cycle of interest rate cuts.first, it will affect the implementation of a relatively loose monetary policy by the people's bank of china, which may boost economic growth through a variety of means such as lowering the reverse repurchase rate, the interest rate on existing mortgage loans, and lowering the deposit reserve ratio.in addition, the rmb has recently appreciated, and the pressure on the central bank to maintain exchange rate stability has been greatly reduced, which also lays the foundation for the central bank to adopt more monetary policy tools. the rmb entering the appreciation range will attract foreign capital to return to rmb assets, which is good news for the current weak a-share market and will help promote a slight rebound in the a-share market. (he yang)
(this article does not constitute any investment advice)
china business news is compiled from beijing daily, shanghai securities news, and national business daily
