On September 5, the People's Bank of China decided to reduce the foreign exchange deposit reserve ratio of financial institutions by 2 percentage points from September 15, that is, the foreign exchange deposit reserve ratio will be lowered from the current 8% to 6%. This is the second time this year that the central bank has lowered the foreign exchange deposit reserve ratio of financial institutions by 1 percentage point after the central bank announced on April 25.
Experts said that the reduction of the foreign exchange deposit reserve ratio of financial institutions means that domestic financial institutions pay less reserves for foreign exchange deposits, which will help increase the liquidity of the US dollar in the market and is conducive to the stability of the RMB exchange rate.
"Reducing the foreign exchange deposit reserve ratio of financial institutions by 2 percentage points can strengthen the management of foreign exchange liquidity of financial institutions, partially release foreign exchange liquidity, adjust the supply and demand relationship in the foreign exchange market, and smooth the fluctuations in the foreign exchange market." Chief Economist, Greater China, Jones Lang LaSalle Pang Ming, director of the research department and director of the research department, believes that, more importantly, the policy signal of stabilizing foreign exchange market expectations and maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level can be restrained to a certain extent. Possible "herd effect".
Pang Ming said that this move shows that the relevant departments have begun to adopt appropriate policy tools and macro-prudential tools, show their determination to maintain the policy goal of maintaining exchange rate stability, and "cool down" the expectation of unilateral devaluation of the RMB, which is expected to ease the pressure of excessive depreciation of the RMB and promote domestic The balance of supply and demand in the foreign exchange market has brought the RMB exchange rate back to a reasonable and balanced level.
"At present, affected by the accelerated tightening of monetary policy by the Federal Reserve, the US dollar index once exceeded the 110 mark, triggering a passive depreciation of the RMB against the US dollar. The central bank's move sends a positive signal to the market, which is conducive to stabilizing the RMB exchange rate expectations and avoiding irrational overshoots. ” said Wen Bin, chief economist of Minsheng Bank.
Chang Ran, a senior researcher at Zhixin Investment Research Institute, believes that at the end of July this year, the balance of foreign exchange deposits was 953.7 billion US dollars. This reduction in the reserve ratio means that about 19.1 billion US dollars of foreign exchange liquidity will be released to the market. Appropriate reverse adjustments should be made in the situation of more than demand, which will help to reduce the recent depreciation trend of the RMB.
"Compared with the 1% reduction in April, the reduction rate has increased, but the scale of the release is more reasonable." Chang Ran said that the Fed just started raising interest rates in April, and the first 25 basis points of interest rate hikes was small, the dollar index against the The impact of RMB exchange rate movements is limited. However, at present, the Federal Reserve has raised interest rates by 225 basis points in total, and the US dollar remains strong, putting great pressure on the RMB exchange rate, and the adjustment of the foreign exchange deposit reserve ratio should also be increased accordingly.
At present, under the pressure of the Fed continuing to raise interest rates sharply and the rapid upward pressure of the US dollar index, the RMB exchange rate and market sentiment have undergone significant changes. Since mid-August, the RMB exchange rate has experienced a rapid correction. The exchange rate of the offshore RMB against the U.S. dollar, which more reflected the expectations of international investors, also weakened on September 5, falling below the 6.93, 6.94 and 6.95 marks successively during the session, continuing to hit a new low since August 2020.
It is worth noting that this round of RMB depreciation was mainly triggered by the sharp rise in the US dollar index, and the three major RMB exchange rate indices remained stable. Wang Qing, chief macro analyst at Orient Jincheng, reminded: "This means that the regulators will be more moderate in the regulation of the foreign exchange market, and will not pay too much attention to specific points, and the RMB exchange rate will fluctuate in the opposite direction with the US dollar index. The next step, the RMB against the US dollar The depreciation rate will tend to be moderate, and the basket of exchange rate indexes will continue to show a strong trend."
Wang Qing believes that it is difficult to effectively gather expectations of RMB depreciation, and the exchange rate factor will not form a substantial constraint on macro policy adjustments during the year. The central bank's overall policy is to "maintain me", enhance the flexibility of the exchange rate, and give full play to the positive role of the RMB exchange rate in adjusting internal and external balances.
Liu Guoqiang, deputy governor of the central bank, believes that the long-term trend of the renminbi should be clear, and the world's recognition of the renminbi will continue to increase in the future. However, in the short term, two-way fluctuations in the RMB exchange rate are the norm. We have the strength to support a reasonable, balanced and basically stable RMB exchange rate.
