On May 27th, the seventh working meeting of the national foreign exchange market self-discipline mechanism was held in Beijing, and representatives from 30 member institutions of the national foreign exchange market self-discipline mechanism attended the meeting. The meeting pointed out that the current foreign exchange market is generally balanced. There are many market and policy factors affecting the exchange rate in the future, and the RMB may appreciate or depreciate. No one can accurately predict the exchange rate trend. Whether it is short-term or medium-and long-term, exchange rate inaccuracy is inevitable, and two-way fluctuation is the norm. Whether it is the government, institutions or individuals, we should avoid being misled by the predicted conclusions.

What does RMB appreciation mean?

As we all know, the recent appreciation of the RMB is closely related to the US currency overshoot. Since 2020, the Federal Reserve has maintained a loose monetary policy, which has led to the spread of the US dollar to all countries in the world. Which country and region will the dollar flow to? After the appreciation of the local currency, it will affect the export business, and export is one of the troikas of economic development. Under normal circumstances, national health will lower interest rates to promote economic growth. Put money into the market, but once the interest rate is cut, the dollar will raise interest rates in turn. Seven years later, the assets of other countries were sold, leaving a chicken feather. This time, they have had enough of this acquisition method and decided to boycott the development of the US dollar, or many European countries in China also acquiesced in the appreciation of their currencies. It is undeniable that their currency appreciation will indeed affect their export business, but the RMB has long been undervalued. Now it belongs to the return of value, so the impact is limited.

What are the benefits of RMB appreciation?

The appreciation of RMB is beneficial to importing enterprises. We can pay attention to the stocks of companies engaged in import business, but on the other hand, the continuous appreciation of RMB will also attract currencies from all countries to flow into China, which will lead to the passive increase of domestic market currencies, push up asset prices and further increase the stock market. From May 25th to 27th, funds flowed into the north for three consecutive days, exceeding 45 billion yuan. This is the attitude of the market towards China A-share market and China market, so it is inevitable that A-share market will rise sharply.

What impact does the appreciation of RMB have on our life?

Imported goods are cheaper. China mainly relies on imported varieties such as pulp, chemical raw materials, petroleum, ore and high-end equipment manufacturing. Related industries may usher in phased benefits. Second, the high price of export commodities has reduced the international competitiveness of China as a factory in the world, and the most direct impact is the transfer of industries to low-end industries. Such as machinery and electronics, clothing and textiles, furniture and household appliances, plastics and other commodities.