First of all, we understand that external demand is more important for "steady growth" in the case of overcapacity and declining investment in China, and the price factor is more important in the case of weak overall demand in overseas markets. At this level, a moderately weak exchange rate is needed to stabilize export growth. Fortunately, with the increasing use of RMB in cross-border trade, the impact of exchange rate on trade can be partially neutralized.
Secondly, the change of the Federal Reserve's monetary policy is an important variable affecting the flow of funds next year. The difference of economic growth between China and the United States will lead to the differentiation of monetary policies between the two countries, and then affect the formation of RMB exchange rate.
Thirdly, we believe that the government's willingness to promote the internationalization of RMB needs a strong exchange rate to ensure it. For international currency, the stability of value is the basis of its trading medium, pricing scale and storage function. Both the RMB settlement in the trade field and the issuance of financial assets denominated in RMB need to be based on the stability of exchange rate.
Finally, more changes in the RMB exchange rate may come from the optimization of the formation mechanism. In the future, foreign exchange market transactions will be more active, and the increase in the deviation between the transaction price and the central parity announced by the central bank will become the norm.