Can the “dollar shortage” impact the global non-US currency RMB become a safe haven?
Since the Federal Reserve cut interest rates twice and continued to increase easing measures, the US dollar index has opened a channel of appreciation, starting at 10 and breaking from around 95 to 103, standing at a three-year high.At least, the exchange rate of the renminbi against the US dollar fell, onshore RMB fell by 700 basis points, and offshore RMB fell by more than 800 basis points.  Monetary policy is loose, and the exchange rate of the US dollar does not fall but rises, which seems to be contrary to the common sense of economics.From the reporter’s interview, the main reason for the appreciation of the US dollar is the tight liquidity of the US dollar.  The three-year high of the US dollar stems from the US dollar ‘s tight liquidity. For three months, the Fed has cut interest rates by 150 basis points, replacing the federal funds rate with near-zero interest rate levels.Tool of.However, the dollar strengthened against the trend.Beginning on March 10, the US dollar entered the appreciation channel, which closed at 95 on March 9.0586 rose to 102, which closed on March 19.6881, 10 rated appreciation rate reached 8%.On March 20, the US dollar index topped 103.0108, the last time the US dollar index was above 103 was traced back to January 2017.  As of around 11:00 on March 20, Beijing time, the US dollar index has declined, but it is still above 102, reported at 102.1706.  While the US dollar index rose sharply, since March 9, the RMB has shown a rapid unilateral decline in value against the US dollar, quickly falling below 7.On March 9, the onshore RMB exchange rate against the US dollar approached 6.90 mark, the highest rose to 6.9090, but then fell below the 7 mark on March 12 and reached a minimum of 7 on March 19.In 1238, the high point of the Air Force fell to more than 2000 points.On March 19, the onshore RMB closing price was reported at 7.At 0910, it fell over 600 points.  The trend of offshore renminbi is similar, from the highest point 6 on March 9.Around 90 fell to 7.Around 16, the lowest reached 7 on March 19.1651, the lowest since October 2019.The final offshore RMB receipt is at 7.1574, fell more than 800 points.  On March 20, the central parity of RMB against the US dollar reported 7.1052, down 530 basis points from the previous trading day.As of 11:00, the onshore renminbi was reported to 7 against the US dollar.At 0819, the offshore renminbi was reported to 7 against the US dollar.1036, both rebounded from yesterday.  Why has the Fed’s monetary policy continued to loosen, but the dollar has started to strengthen?Chen Li, an analyst at Chuancai Securities, pointed out that the current performance of the US dollar index is mainly affected by the relationship between currency supply and demand, and the tight liquidity of the US dollar is leading.Under the influence of the epidemic, the current US commercial bank funds are expected to be poor, and the Fed’s sharp interest rate cuts have completely replaced the market.At the same time, due to the strong panic in the overseas capital market, the escape of market funds has caused some fund management institutions to face the retreat contradiction of scale expansion. Institutions continue to increase leverage to guarantee funds, and at the same time sell all kinds of assets held in positions to make the market flow of dollars.Sexual flow to institutions.  Zhou Maohua, an analyst at China Everbright Bank ‘s Financial Market Department, told Sauna. Yewang said that US stocks have been fused several times and European securities have also plunged continuously. Market panic has led to asset sales and investors have held cash, so the US dollar has become a global investor in the short term.Sweet and sour. “In fact, the weakening of British pounds, euros and other currencies is also one of the reasons for the strength of the US dollar index. Since March 9, the pound has fallen against the US dollar to reach 12.5%, the euro also fell 8 against the dollar.2%, mainly due to investor risk of the new crown epidemic “out of control” in Europe.Pound sterling, Euro and other currencies account for a higher proportion of the dollar index basket of currencies, so the dollar index is stronger.  Can non-US currencies fall in RMB and become a safe haven?  In fact, under the strong dollar situation, many non-US currencies declined.The pound is from 1 in early March.Around 30 fell to the current 1.At around 14, it reached a new low since 1985 and even exceeded the previous low set after the Brexit referendum in October 2016.On March 20, the British pound reached a minimum of 1 against the US dollar.1412.  The Australian dollar also fell sharply.The exchange rate of the Australian dollar against the US dollar is 0 from early March.Around 66, it fell to the current 0.Around 58, the lowest reached 0 on March 19.552, the lowest in eight years.The Australian dollar against the yuan once fell below the 4 mark.  Britain and Australia have cut interest rates twice in a row since March, and will repricing the lowest level in history.The UK cut interest rates by 50 basis points to zero on March 11th.At 25%, the interest rate was reduced by another 15 basis points to 0 on March 19.1%, and plans to increase holdings of 200 billion pounds of British government and corporate bonds.  The US Federal Reserve announced a rate cut of 25 basis points to zero on March 3.50%; March 19 again cut interest rates by 25 basis points to 0.25%, and said it will not raise interest rate targets until full employment is achieved.In addition, the Fed also announced that it will provide at least A $ 90 billion in regular financing mechanisms for the banking system and quantitative easing measures such as the purchase of government bonds.  Among emerging market currencies, currencies such as Russian rubles, Indian rupees, and Mexican pesos have all hit record lows against the US dollar.  Under this circumstance, will the RMB still face depreciation pressure in the future?The deputy director of the CITIC Securities Institute clearly analyzed that the chain reaction caused by leverage risk may form a black hole in the liquidity of the US dollar market and bring about a “recessive strong dollar.”The trend of the US dollar has an important impact on the RMB exchange rate. Against the backdrop of tight liquidity of the US dollar, the RMB exchange rate is facing depreciation pressure.The recent net decrease in northbound funds has also put pressure on the RMB exchange rate. The reason for the net decrease in northbound funds may be that the tight liquidity of the US dollar has led to a reduction in assets held by foreign investors under their own risk control system.Subsequent RMB exchange rate movements still need to look at the trend of the US dollar, and the relief of the continuous appreciation of the US dollar requires the release of liquidity pressure from the US dollar.  Zhou Maohua said that the current overseas epidemic is still in the stage of rapid proliferation, and investors’ demand for US dollar liquidity is still high. In the short term, the US dollar may remain relatively strong, which poses certain depreciation pressure on the RMB exchange rate.However, against the backdrop of a stronger US dollar, the renminbi has performed strongly relative to other non-US currencies, and other currencies have depreciated more than the renminbi against the US dollar.This is mainly because the domestic epidemic prevention and control has given the market tremendous confidence. The domestic economic activity has significantly increased in the past three months, while the impact of the epidemic in Europe and the United States and other overseas areas has only just begun to show.In addition, investors are full of expectations for the long-term development of the domestic economy and capital market, and the basic balance of international payments, which are the supporting foundation of the RMB exchange rate.  Lu Zheng, chief economist of Industrial Bank, believes that in large economies, China ‘s absolute interest rate is relatively high, and the 10-year Treasury bond interest rate is also significantly higher than other countries; the valuation of A shares is also in the depression of the global stock market, and the yieldIt is higher than Japan and the United States, and slightly lower than Europe. In addition, the economy and enterprises are still in high growth, so it is very attractive for global assets.At present, China’s epidemic prevention and control measures tend to be clear. Although GDP has improved, all aspects have been expected, and policy space is still contradictory. Therefore, RMB assets will follow the trend and become a “safe haven” for global assets.  Sauna, Ye Wang Gu Zhijuan editor Sun Yong proofreading Wang Xin

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