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RMB Exchange Rate Trend In The Following Days
- Jan 11, 2019 -

Today, many people in the foreign trade group asked me: The exchange rate fell to 6.78, what should I do?


Some people say that a few days ago, it was 6.88. In a few days, it fell to 6.78! !


There are still a lot of dollars in the account that are not settled, which is equivalent to tens of thousands of pieces a day! !


Oh, not that I said you guys. I have reminded you of the exchange rate problem several times. I have sent two articles before, which is to say this question.


Foreign trade forward locks are at the time

The RMB exchange rate has fallen sharply. Should we quickly settle the exchange rate? (This is posted on WeChat public account)

In November, I mentioned that November was a very good time to lock up, so I wrote a suggestion to lock the exchange rate to avoid exchange rate risk. At that time, the students locked up to April-May next year, and the settlement rate was around 6.93.


On December 4th, it was the RMB exchange rate that fell sharply and fell to a minimum of 6.83. The next day, I sent a public article: "The RMB exchange rate has plummeted. Should we quickly settle the exchange? 》.


At the end of the article, I have given very clear suggestions: If the RMB exchange rate is again at 6.90, don't hesitate to make a decisive settlement. In the article comments, I also answered your questions.


Then, within a few days, the RMB exchange rate ushered in a partial rebound. On December 10, the onshore renminbi rushed to more than 6.90, with a maximum of 6.91.


At this point, a wave of horns is blown up and decisively settled!


RMB exchange rate against the US dollar continues to fall


On December 10th and 11th, it is the two-day golden period of settlement in December. Rushed to 6.90, decisive shot is!

A lot of time ago, I saw the foreign trade people suggested by me in the previous article to seize the opportunity to settle.


Many friends who have just collected foreign exchanges do not know what to do next. I can only say a simple analysis. After all, I am not a professional financial person, nor can I predict the exchange rate trend.


Only from my personal point of view:


Offshore RMB represents external factors and acts on the onshore RMB

First of all, there is a certain connection between the offshore RMB and the onshore RMB, which will affect each other.


Onshore Renminbi (CNY) exchange rate: refers to the real-time exchange rate of RMB in mainland China. The People's Bank of China authorizes the China Foreign Exchange Trading Center to announce the onshore RMB exchange rate. As we all know, China's mainland market does not allow the circulation of the US dollar, that is, the so-called mandatory foreign exchange settlement system, the US dollar must be exchanged for RMB, and because of foreign exchange control, the onshore RMB exchange rate does not reflect the real supply and demand of the market. We do foreign trade, and export settlement is directly related to the onshore RMB exchange rate against the US dollar.


Offshore Renminbi (CNH) exchange rate: The offshore RMB market refers to the overseas market that can operate the RMB exchange rate trading business. It can be said that the offshore RMB represents external factors, and the main offshore RMB market is currently in Hong Kong (CNH=CN HongKong). Singapore, London and Taiwan are also actively developing the offshore RMB market, and many foreign investors or institutions buy and sell offshore RMB.


Generally speaking, foreign countries hope that the renminbi will appreciate sharply, which will help open the Chinese market. In the past many years, the United States has always accused the renminbi of appreciating too slowly. However, China is not willing to appreciate and maintain a certain depreciation, which is conducive to increasing exports.


The trend of offshore renminbi reflects the changes in supply and demand in the international foreign exchange market. Although our settlement mainly depends on the onshore RMB of the domestic banking system, the onshore RMB is affected to some extent by the offshore RMB. In general, the role of offshore renminbi in pricing the renminbi exchange rate has gradually increased.


The dollar weakens, foreign capital buys Chinese financial assets and continues to be bullish

The change in the RMB exchange rate is determined by the market supply and demand relationship. Now the trend of the renminbi is linked to a basket of currencies, not just the dollar. The weakening of the dollar is only one reason.


The trend of the US dollar index has begun to decline

US dollar index continues to weaken


The risk of US stocks continued to heat up, the US government continued to “close the door” and the domestic party’s US dollar index continued to weaken, which partly contributed to the relative appreciation of the renminbi.


More than a week ago, Fed officials issued a dovish speech, which caused investors to worry about the US and the global economy.


Offshore renminbi has fallen below the 30-week moving average

Any big-level trend, at least from the weekly K line. On the weekly K line, last week fell below the 20-week moving average!


This week's weekly K line, has not finished, there is still one day left, but it is already below the 30-week moving average!


RMB against the US dollar fell below the 30-week moving average


The 20-week moving average (the red K line marked with the number 1 in the figure) is generally an important reference support level in the mid-line trend.


The green negative line last week (marked as the number 2 K line) has fallen below the 20-week moving average. It continued to fall this week, falling below the green 30-week moving average.


Explanation: The upward momentum is not enough, and the decline is not over.


The overall trend is down, cherish every rebound opportunity

How can the exchange rate change, no one can accurately predict. This wave falls, I think the floating range should be in the range from 6.90 to 6.65.


The central bank has spoken and will not break. In fact, the central bank set a line of defense at 6.90 and will not let the exchange rate stay above 6.90 for too long. So on the last wave, I also suggested a 6.90 decisive settlement.


However, as for the current downturn, the lowest will fall, which is hard to say, whether it will continue to fall to 6.70, or even 6.70, is unknown. After all, the central bank does not want the RMB exchange rate to fluctuate too much. It is the only criterion for the central bank to maintain two-way fluctuations within a certain range.


However, from many indications, the renminbi still has room to continue to appreciate, and from the trend point of view, the overall trend is in a downward trend.


The worst case is: all the way down plus a small rebound, if you fall 6.70, below 6.69 – 6.65 is the strong support range, here is the point on the upper edge of the platform center before the previous wave fell to the bottom.


The possibility of falling 6.65 is not too big. Falling to 6.69 – 6.65 there will be huge amounts of money to attack.


Suggestion: Wait 1-2 days to see if there is a partial small rebound in the trend. I will send another message at the latest next Wednesday. If there is no partial rebound, settle the exchange as soon as possible.