1 in the limit of the RMB exchange rate, the central bank will respond to exchange rate stability, however, 2, 3 of the market and the government turned a deaf ear to the market Wei Wen's remarks, trading limit again, the trend of devaluation of the more obvious. So far, the RMB exchange rate is the third consecutive day limit, the exchange hit a new record since the change. There are even pessimistic about the market believe that the Dec. 31 RMB may fall below 7 yuan. According to a number of traders said yesterday the central bank into the domestic currency to the U.S. market with liquidity. This boost, trading the yuan against the U.S. dollar from the price limit.

Increase over pre-amendment

On December 1, the People's Bank of China will RMB exchange rate against the U.S. dollar 6.8505 set the previous trading day down 156 basis points, or 0.23 percent. Later in the trading session, the RMB exchange rate fell 0.5 percent, the central bank touched the provisions of the Price Limits. Bank of provisions in a single day of the RMB exchange rate fluctuations of no more than 0.5 percent of the U.S.. 2, the yuan fell to reproduce the trend, and again hit 0.5 percent of the bottom line. 3, the China Foreign Exchange Trade System announced the Renminbi against the U.S. dollar for 6.8502 U.S. than 2 points, 25 rebound, but in the spot market trading in the yuan against the dollar spot exchange system opens inquiry reported 6.8845, down 343 points, hit another day Fluctuations in the range of 0.5 percent ceiling, which is the third consecutive day of RMB trading day limit.

Changes for the majority of people in the industry believe that the existence of a certain rationality. "RMB against the U.S. dollar dropped to a certain extent is reasonable. From the forming mechanism of RMB, the yuan should be a reference to a basket of currencies. Prior to this we have to take the yuan pegged to the U.S. dollar, the dollar's strength led to high levels of the RMB exchange rate There is a moderate depreciation of the RMB exchange rate should have a level of the amendment. "Of the Central University of Finance and China Banking Research Center Director Tian Yong, Guo said.

Chief currency analyst at Bank of China, said Tan Yaling," since 2005 has been to exchange the RMB against the U.S. dollar has been in a unilateral revaluation, has appreciated nearly 20% of the exchange rate fluctuations in the market is the release of the normal risk, rational response. "

Vigilance on a large scale exodus of

hot money

This is a significant day in a row down the RMB, the yuan hit a series Inquiry market volatility lower limit of the market led to arbitrage on the cross-border capital fled concerns. According to previously published data on external storage, eight or nine months since, China seems to have a certain sign of outflow of capital.

Guangdong Academy of Social Sciences" abnormal flow of funds outside research, "Li You-hwan, head of the group said, according to the group from underground banks to the monitoring data, 9 in the second half that outflow of hot money flowing into the balance point in October , In November showed a net outflow of hot money is the situation.

Li You-hwan said that the RMB is bound to affect the changes to the entry and exit of hot money.

State Administration of Foreign Exchange and the State Administration of Taxation recently issued the" Regulations on Trade in Services, and other items submitted to the foreign tax paid to prove that the notice of the issue "to further regulate trade in services, and other items submitted to the foreign tax payment proof. Analysts believe that the introduction of the notice and may prevent a large number of funds relating to flee.

Appreciation of the medium and long-term trend has not changed

At present, there are many voices that have entered the devaluation of the RMB channel, but some experts and institutions that the recent trend of the RMB exchange rate is in the international market and domestic macro-economic environment, the result of changes in the short term does not mean that the steadily RMB will reverse its long-term trend. Credit Suisse economist Dong Tao, chief Asia, in an interview with reporters said that China's economy is slowing down, a substantial decline in the inflow of overseas hot money, the U.S. dollar, the yuan a slight devaluation of the room, but the devaluation of the RMB against the U.S. dollar Will not necessarily be welcomed by other countries, will inevitably bring about the global economy and trade disputes, which may even become the new president of the United States, China and the friction between. "The market outlook towards the renminbi issue, personally think that there will be a slight devaluation of the short-term, medium and long-term appreciation trend has not changed."

CICC 2 published studies that next year against a basket of currencies to appreciate the yuan rate would be significantly slower rate of 2-3 percent, against the U.S. dollar will depend on the trend of their own. But the report also stressed that next year will not be substantial depreciation of the renminbi. If the marked depreciation of trading partners to encourage trade protection sentiment and could lead to large outflows of funds.

Morgan Stanley, chief economist for Greater China Wang pointed out that despite the decline in exports, but China's trade surplus in October is still a new record high, and have 2,000,000,000,000 U.S. dollars of foreign exchange reserves to support a strong yuan, RMB exchange rate sustained Devaluation is unlikely.

Exchange or change the time is ripe

The devaluation of the yuan, also caused the industry to discuss the exchange rate system reform tide.

Morgan Stanley, chief economist for Greater China Wang Statistics found that from July 2005 to exchange, the central bank issued a total of 14 quarter monetary policy implementation report, the latest addition to a report of the other phases are There are one or two paragraphs on the RMB exchange rate policy, repeatedly stressed that "initiative, controllability and gradual progress" and "a reasonable and balanced level basically stable" in principle. However, the latest release of the third quarter of this year's report, the wording does not appear that this market speculation that the central bank may change the exchange rate policy.

Industrial Bank funds operations center political commissar, chief economist Lu said that this is likely to be fluctuations of the RMB to expand into the stage of the devaluation of the beginning of the channel," between now and the first half of next year before, it will be the exchange rate of RMB against the U.S. dollar's devaluation of the best Window of time. "Examples from other countries, the realization of the full free-floating exchange rate should have two conditions: First, the international price stability, and the other is the domestic capital flow rate at a low level.

Background

4-5 December, the fifth China-US Strategic Economic Dialogue will be held in Beijing. China and the United States in the upcoming fifth strategic economic dialogue against the backdrop of the yuan's exchange rate continued to rise down the outside of common concern. U.S. Treasury under-secretary of international affairs McCormick said on December 1, the fifth Sino-US strategic economic dialogue, the United States will also urge the Chinese government to allow the yuan to appreciate further.

The voice of the impact of the trend of the yuan

Dec. 3 JP Morgan economist Frank Gong said the yuan against the U.S. dollar fell to the Obama sent a signal: the economic slowdown in the environment, China is also facing its own political problems in Sino-US strategic economic dialogue Mechanism to hold regular high-level talks will help both sides to discuss trade imbalances and exchange rates.

On December 2, Deputy Prime Minister of the State Council, Wang said that various localities and departments should conscientiously implement the scientific concept of development, in accordance with the unified arrangements of the central and requirements, implement the plan, efforts to expand domestic demand and maintain steady growth in foreign trade.

On December 2 U.S. Treasury Secretary Paulson pointed out that in order to stimulate economic growth in China's policy measures are very important in the dialogue that he would urge China to take further measures to minimize the impact of financial crisis.

On December 1 the central bank said the central bank will keep the RMB exchange rate basically stable on the basis of continued reform of the exchange rate. The yuan-US dollar exchange rate fell rarely occur, the central bank said renminbi exchange rate did not fall out of range, not to comment.

November 11 the central bank governor Zhou Xiaochuan in Brazil to attend the Bank for International Settlements said during the meeting, did not rule out the adoption of the devaluation of the yuan to promote exports and maintain economic growth.

On July 14, a official sources, the Ministry of Commerce of the State Council has formally proposed to slow down the pace of RMB appreciation, at the same time improve the clothing, toys, footwear export tax rebate rate to prevent the emergence of the significant downturn in exports.

Geometric effects of the devaluation of the Renminbi?

Export

Good business but it is difficult twisting trend

National Strategy Securities analyst Liu Jia Zhang believes that the devaluation of the Renminbi against the export sector to cut costs has some advantages, it is difficult to fundamentally reverse the decline in exports. As a result of a global recession is a foregone conclusion, faced with shrinking external demand is the undisputed facts.

Price

Deep house price increase exacerbate or

down

Commentators knife in the real estate blog author pointed out that the deep-rate depreciation of the renminbi, will affect both the domestic real estate prices: The first is that foreign hot money to China Kandi the value of real estate, and foreign hunters prepared to return to the Chinese property market Lies have been broken; the other side of this coin is also the value of real property revaluation, with deep price increase is inevitable down.

The stock market

Foreign stocks to benefit from dividend air space

Yangtze researcher Zhong Hua Securities, said the devaluation of the Renminbi on the export-oriented companies directly affected the performance of specific sectors such as textiles, garments, electronic appliances, toys, shoes, hats, furniture, building materials and construction machinery, and so on, will also benefit from the SME board. By the negative impact of the devaluation of local currency may be larger air plate. Recent aviation industry as a whole conditions were not good, an exchange gain of the previous buffer is a major loss of support. If the yuan to appreciate by a further depreciation of the airline's foreign currency liabilities arising from exchange rate gains will be turned into exchange losses.

Financial management

Opportune time in the allocation of U.S. dollar assets

The Bank of East Asia Finance Manager Xie Liang suggested that the public can exchange their foreign currency holdings and demand situation on the rational combination of fiscal adjustment. If the dollar-denominated assets have been, and the future use, this time not to rush to settlement, can be maintained; in the future want to emigrate abroad, and not in the hands of foreign exchange, could be considered part of the bargain to buy dollars, but not too much too fast; No foreign exchange demand of foreign exchange held by non-citizens, if the funds are better off and can be purchased in a timely manner a small amount of U.S. dollars, so dollar time deposits, the purchase of insurance or security of the financial proceeds of U.S. products.

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