Author: Knowledge Planet Looking for Old Seven's Reading Circle

Recently, many people have come to ask Lao Qi. Have you heard? Mom wants to give up the exchange rate! I'm confused. I said, where did you hear all this gossip? As a result, they showed a screenshot. The above news is that Zhou, director of the Financial Research Institute of the central bank, said at the Moganshan meeting that under the condition of RMB internationalization, we can't control the RMB, and the central bank will eventually give up the exchange rate target. The RMB exchange rate is determined by the preferences, expectations and transactions of all markets in the world. The RMB will appreciate against the US dollar in the medium and long term, which is the long-term economic growth of China.

I don't know if you understand, but it is necessary for Lao Qi to translate it for you to avoid misunderstanding.

First of all, people don't give up the exchange rate, they give up the exchange rate target, that is to say, I don't actively intervene in the exchange rate and let it fluctuate freely according to the supply and demand in the international market. The reason for this is that now that the RMB has entered a formal benign appreciation trend, the central bank certainly does not need too much intervention. And in fact, no country will take the initiative to admit that it controls the exchange rate, and eventually it will be tainted with manipulating the exchange rate. Therefore, it is by no means like some intermediaries said that protecting housing prices and giving up the exchange rate are completely different things, and there is no connection at all. It is a deliberate distortion of the facts.

Secondly, the long-term appreciation of the RMB exchange rate is certain. We are a manufacturing country, an exporting country, a surplus country, and the United States is a consumer country and a deficit country. That is to say, if we sell things to earn back dollars, then the RMB will definitely appreciate. Everyone must know the examples in life. It must be that sellers are getting richer and buyers are getting poorer. If you still don't understand the formation mechanism of exchange rate, you can look at an interesting book we told you a long time ago in the reading circle of the knowledge planet Laoqi, called Island Economics, and tell you the operating logic of the world economy and finance with a story that happened on an island.

Third, the depreciation of the dollar is long-term. As the central bank said, they always engage in quantitative easing and try to pass on their own crisis through the world currency, the US dollar. Moreover, the foreign debt of the United States is increasing, which doomed the long-term depreciation of the dollar. Simply put, the more things, the less valuable they are. Until the dollar's status as the world currency is shaken, of course, this is also the bottom line for Americans, who are also looking for this level of guarantee, not only to pull out the goose feathers, but also to prevent the geese from crowing. So now everyone is playing a game. Before this critical point, Americans will benefit. After this critical point, they will fall into disaster.

Then you may be more concerned about the impact of the central bank's abandonment of exchange rate targets, including the long-term appreciation of the renminbi, on our economy, stock market and property market. These questions are also the most frequently asked by fans of Knowledge Planet Qi.

First of all, the long-term appreciation of the renminbi is not good for exports. Export enterprises settle accounts in US dollars, signing contracts first and then settling accounts. By the time they get the money, the dollar has depreciated, and it is likely that the profit will be gone. However, appreciation is conducive to imports, and the purchasing power of RMB has increased, and more resources can be bought. This will enable us to reduce the trade surplus. Net export, an economic carriage, will be affected, and it will not be so easy to earn foreign exchange through export or processing with imported materials in the future.

Secondly, with the appreciation of the local currency, the value of our assets will rise, which is more conducive to the inflow of foreign capital, resulting in abundant domestic liquidity, and China A shares will accelerate their upward movement for a long time. On the contrary, it is not good for Hong Kong stocks and US stocks. The appreciation of RMB will hedge their investment income. Some people say that the Hong Kong dollar will be decoupled from the US dollar. This will not happen. If the Hong Kong dollar is decoupled, there is no need to exist. Isn't it good to settle in RMB?

Third, for the property market, the impact of RMB appreciation is more complicated. On the positive side, just like the stock market, more hot money inflows and more social mobility will push up the price of RMB-denominated assets and make house prices rise, but there is also a negative side. Once the RMB exchange rate appreciates, foreign exchange flows in and domestic foreign exchange control is less tense, then the property market will obviously change hands, and some people may take this opportunity to sell houses. The year of 20 16 was a year in which real estate rose sharply, and it was also the year in which our foreign exchange reserves lost the most. It shows that many people have transferred their wealth abroad. This is a more dangerous thing for the property market. Anyone who has speculated in stocks knows what it means to change hands in high places. So is the property market. Therefore, in the future, we will do our best to prevent this from happening. The more the RMB appreciates, the stricter the supervision should be. Everyone must understand that the balance sheet of the central bank and the balance sheet of the people are opposite. We all think that RMB is an asset, but in the central bank, RMB is a meal ticket issued by him and belongs to a liability. For the central bank, the real asset is foreign exchange reserves, so foreign exchange is his lifeblood. In order to protect foreign exchange, you can do whatever it takes. Lao Qi judged that the property market should be generally stable, less affected by RMB and more affected by regulatory policies.

Generally speaking, if you are not a practitioner in the export industry, RMB appreciation is generally beneficial, especially in investment. Rmb assets, whether stocks or bonds, or those with long-term value and opportunities, have the power to rise. Coupled with the blessing of exchange rate appreciation, they will have a good performance in the long run. But Lao Qi stressed that long-term optimism does not mean that it will continue to rise and adjust in the short term, especially this year. The market will be in a volatile consolidation most of the time. After full adjustment, it will continue to go up.