The Central Bank and the State Administration of Foreign Exchange stated in the announcement that in order to further improve the macro-prudential management of full-scale cross-border financing and guide financial institutions to adjust the structure of foreign exchange assets and liabilities in a market-oriented manner, they decided to make the cross-border financing of financial institutions macro-prudential. Adjustment parameter lowered from 1.25 to 1. Financial institutions should establish the concept of "risk neutrality" to better serve economic and social development.

Tan Yaling, president of the China Foreign Exchange Investment Research Institute, analyzed that the measures taken by the central bank and the State Administration of Foreign Exchange to lower the parameters are aimed at cooling down expectations of RMB appreciation.

Tan Yaling: The reduction of parameters is still related to the excessive appreciation of the RMB. From the current point of view, the cycle and magnitude of appreciation are a bit too high, so the central bank's approach is to make the exchange rate move bilaterally under controllable conditions instead of an extreme trend, especially when resuming work and production and facing the epidemic and the global crisis. Amid uncertainty, we need to stabilize the exchange rate and protect businesses. This is a very important and critical period for the real economy.

In March this year, in order to further expand the use of foreign capital, facilitate cross-border financing by domestic institutions, and reduce financing costs for the real economy, the central bank and the State Administration of Foreign Exchange raised the macro-prudential adjustment parameter from 1 to 1.25. At that time, the exchange rate of RMB against the US dollar was still around 7.

However, as China’s economy took the lead in recovering in the world and the U.S. dollar index was weak, the offshore RMB rebounded rapidly from a low of 7.1964 on May 7 to a low of 7.1964 in December within about half a year. Around 6.5, an increase of about 9.6.

In order to curb the excessive appreciation of the RMB, the Central Bank and the State Administration of Foreign Exchange have successively announced in October this year that they will lower the foreign exchange risk reserve ratio for forward foreign exchange sales business from 20 to 0, and phase out the use of RMB against the US dollar. The "countercyclical factor" in the price quote model.

Zhao Qingming, an expert on international financial issues, believes that the herd effect of my country's RMB appreciation is relatively strong at present, and the expectation of unilateral appreciation of the RMB is relatively strong. The central bank and the foreign exchange bureau have lowered the macro-prudential adjustment parameters for cross-border financing this time. It is hoped to reduce the demand for foreign currency loans of enterprises, thereby reducing the selling pressure of foreign currencies and indirectly cooling the expectation of RMB appreciation.

Zhao Qingming: When the RMB is expected to appreciate, the cost of foreign currency loans will actually be very low. In addition, Euro and Japanese yen deposits have negative interest rates, and U.S. dollar deposits also basically have zero interest rates. In this case The interest rate of foreign currency loans is very low, much lower than ours. Coupled with the appreciation of the RMB, it is very cost-effective for our companies and individuals to borrow foreign currency loans, so they will borrow foreign currency loans. On the one hand, they can use them, and on the other hand, they can borrow foreign currency loans. On the one hand, it is to sell foreign exchange, accelerate selling foreign exchange, accelerate selling foreign exchange, and then buy RMB. In fact, the RMB will appreciate.