The mystery of the rapid rise of the renminbi: active appreciation against imported inflation

"History will not repeat, but it will rhyme." The American writer Mark Twain's sentence even applies to the RMB exchange rate issue. The appreciation of the renminbi has accelerated, and it is constantly brushing new heights. On March 22, the RMB exchange rate against the US dollar rose for the fourth consecutive trading day, and for the first time broke the 6.56 mark to 6.5592, a new high since the exchange rate. After only two days of short breaks, the record was refreshed again on March 25, when the central parity of the yuan against the US dollar hit a new record since the exchange rate, reaching 6.5580. This is far from over, and the guess of a minimum of 5% annual appreciation is rumored. Due to the frequent pressure from the United States-led countries, the previous appreciation of the renminbi has been more passive. What is the difference this time? The Chinese Foreign Ministry said on March 22 that the G20 meeting in Nanjing on March 31 was an informal academic seminar that would not discuss the RMB exchange rate. Under this tone, the noise of the appreciation of the renminbi seems to have decreased this year. From this point of view, the biggest difference is that the appreciation of the renminbi has become passive and active, and the mission is to act as a killer to curb inflation. Even US Treasury Secretary Timothy Geithner acknowledged that China is suffering from inflation. Song Gelong, deputy director of the National Development and Reform Commission's Department of Physical Reform, recently said that the RMB exchange rate issue said that we must consider not only the trade strategy but also the financial strategy and national strategy. Yi Gang, deputy governor of the central bank, stated on March 23 that “all possible policy instruments will be used to fight inflation”, which is a footnote. "At present, China's inflationary pressures are more complicated, and the appreciation of the renminbi is also a powerful tool to cope with the pressure of imported inflation." Zhang Ming, a researcher at the Chinese Academy of Social Sciences, told the China Times reporter. Previously, in order to curb inflation, the cost of central bank bills is increasingly high, and interest rate hikes are also a concern. The statutory deposit reserve ratio has reached an all-time high of 20%, including a rare deficit in the first quarter, which makes the usual means seem to be stretched everywhere. . Exchange rate tools come in handy at the right time. The official statement that the exchange rate issue is an international repertoire of traditional repertoire, but now has a new version. First of all, it was an "Oolong Play". On March 15, Xia Bin, a member of the Central Bank’s Monetary Policy Committee, was reported by the media that he believed that “in the process of small fluctuations in the exchange rate and the gradual expansion of the floating range, depending on the economic development dynamics, it is not excluded to choose a larger One-time exchange rate adjustment." As soon as the news came out, it immediately set off an uproar. Xia Bin urgently clarified that the first time in his Weibo, the report was a "misreading" of the views in his new book. However, no matter who is right or wrong, the whole process makes the market read a lot of aftertaste. Xia Bin mentioned in the new book that China’s exchange rate system design during the transition period needs to be grasped. One of the aspects is to establish a central exchange rate for a certain period of time, but it may not be made public. At the same time, according to the economic and financial development, the official can make some one-time adjustments in a timely and proactive manner, and can also be decomposed in slow fluctuations. Everything depends on market conditions, as appropriate. The story is not over, and then it is a scene of "serial drama." Yu Yongding, a former member of the Monetary Policy Committee and director of the World Economics Institute of the Chinese Academy of Social Sciences, publicly pointed out on March 19 that the central bank should minimize the intervention in the foreign exchange market to ease the pressure on the purchase of US Treasury bonds; if it may lead to the appreciation of the renminbi, Then we need to be well prepared and adopt different policy measures to speed up the pace of exchange rate liberalization. Earlier, Li Bo, director of the Second Division of the Monetary Policy of the central bank, also said that if the central bank does not purchase foreign exchange, the renminbi will appreciate significantly. He expects the RMB exchange rate to be close to equilibrium during the 12th Five-Year Plan period, which is between 5-6. If the above-mentioned repertoires are only wedges, the statement of Yi Gang, the deputy governor of the central bank, may mean going straight to the theme. According to Hong Kong media reports, on March 23, Yi Gang said in Hong Kong that the main task of the central bank this year is to fight inflation and maintain price stability; therefore, all possible policy instruments, including interest rates, exchange rates, deposit reserve ratios and open market operations. Other means are considered. Is it outside or inside? Exchange rate instruments have become a tool to curb inflation. Under inertia thinking, the problem is coming. In the past, the appreciation of the renminbi is more pressured by the outside world. Since 2003, the exchange rate issue has been the main target of criticism in the West, and it is constantly putting pressure on China. The exchange reform in 2005 and the continuous appreciation of the renminbi made this accusation temporarily stop, but after the financial crisis, the pressure came back. In March 2010, US President Barack Obama called on China to further transition to a "market-oriented exchange rate" mechanism, and then hundreds of US congressmen jointly accused the Chinese government of intervening in the money market. "China has been under pressure from other countries, especially the United States, to demand further appreciation of the renminbi," said Huang Yiping, a professor at the National Development Research Institute of Peking University, in an interview with the China Times. However, some market analysts analyzed in an interview. This year, similar pressures have slowed down. Of course, this does not rule out that the RMB has been blocking its mouth. More views analyze the purpose of RMB appreciation as “Anne”. Huang Yiping believes that the central bank announced in June last year to increase the flexibility of the RMB exchange rate. After that, the RMB has appreciated by 3.7% against the US dollar. This shows that the central bank is using a combination of “tightening currency exchange rate appreciation foreign exchange controls” to reduce domestic inflation and asset bubble risks. On March 14, Premier Wen Jiabao said at a meeting of Chinese and foreign journalists that China will continue to insist that the reform of the RMB exchange rate formation mechanism will not waver. According to changes in market demand, the flexibility of RMB floating will be further increased. But at the same time, "it must also consider whether this appreciation is gradual, because it is related to the affordability and employment of enterprises, and we must maintain the stability of the entire society." On the same day five years ago, Premier Wen Jiabao also said that the use of administrative means to make the renminbi rise or fall in one go will not happen again, and there will be no more unexpected things. The macroeconomic situation is not the same as it was five years ago. Inflation has become a lingering nightmare. The data shows that from the middle of 2009 to the present, both the total CPI and the core CPI deducting food prices have continued to rise. The CPI index for January and February this year remained at a high of 4.9%. In fact, in order to curb inflation, the policy combination has been hit recently, but the operational space of conventional means has been blocked, and the regulatory bottleneck is becoming more and more obvious. The first quarter has not been completed, the deposit reserve ratio has been raised three times, the latest on March 18, this is the ninth consecutive increase since last year, regardless of the differential deposit reserve, the deposit reserve of large financial institutions The rate reached a historical high of 20%, leaving only 5 percentage points from the theoretical space of 25%. Bills instruments have also gradually entered the bottleneck. JPMorgan’s report pointed out that central bank bills will expire in a short period of time, with a total maturity of 230 billion yuan in the remaining period of March and 855 billion yuan in April and May. Therefore, despite the significant slowdown in M2 money supply growth in the macro economy, it is expected that the recovery of liquidity will still be faced in March and April. It is understood that since April 2003, the central bank has issued a bill for hedging operations for eight years. "All these operations have costs, and the deposit reserve and bills have to pay interest. We must consider the marginal cost of this." And how big is the marginal benefit." Yi Gang said this at Peking University in February this year. Choosing to raise interest rates seems to involve a wider range. Zhang Ming said that the current inflationary pressures facing China are both demand-level factors such as overheated economy and over-currency, as well as supply-level shortages such as food supply shortages and imported inflation. Whether or not to raise interest rates continuously is in a dilemma. Under the inflationary trend of the appreciation of the renminbi, passive and active, perhaps better. Zhang Ming believes that the initiative and flexibility of RMB exchange rate adjustment should be improved to manage the pressure of imported inflation and promote the effective allocation of resources, while avoiding the passive appreciation under cyclical external pressure. Nowadays, the global commodity is “up”, and the pressure of imported inflation has increased sharply: from the end of June 2010 to the end of February 2011, the spot price of Brent crude oil increased by 49%; Chicago Commodity Exchange Soybean (4503, 44.00,0.99%) and corn (2402, 2.00, 0.08%) 1 month futures rose 40% and 75% respectively; London Metal Exchange copper price (72200, -280.00, -0.39%) rose 51%... The current turbulent situation in the Middle East adds uncertainty to commodities. JPMorgan’s report said that the appreciation of the renminbi will bring about a decline in China’s domestic money supply, which in turn will control inflation and inflation expectations. JPMorgan Chase predicts that a 5% appreciation of the renminbi will lead to a 6.4% decline in broad money supply, which will also largely curb the driving force for rising inflation. The accelerated appreciation of the renminbi, in addition to alleviating the pressure of imported inflation, has a "effect" on the trade surplus problem that has been plagued for many years. Zhang Xiaohui, director of the central bank's monetary policy department, pointed out in the latest article on March 24 that the balance of payments surplus has caused the central bank to passively purchase foreign exchange, spit out excess RMB base currency, and directly increase the money supply, thus creating pressure for excess liquidity. “The trade surplus is too large to be the source of inflation.” Yi Gang said at the “CMRC China Economic Watch” report at Peking University at the end of February. This view was opposed by Mei Xinyu (microblogging column), a researcher at the International Trade and Economic Cooperation Institute: at least for the past two years, the trade surplus has not only been the main source of inflation input, but also in imported inflation. The share continues to decline. Wang Min, a researcher at the National Institute of Information Technology, believes that if the renminbi cannot continue to appreciate, large-scale imports will bring more serious domestic inflation problems, and the gradual appreciation of the renminbi is also in line with China's policy orientation. Foreign trade data shows that there has been a trade deficit of 7.3 billion U.S. dollars in February this year, and the deficit in the first quarter has basically become a foregone conclusion. Zuo Xiaolei (column), chief economist of Galaxy Securities, pointed out to reporters that the decline in the surplus in 2011 will become the norm. Industry insiders believe that although the short-term trade deficit can relieve the external pressure on the appreciation of the renminbi to some extent, The rising commodity prices make the appreciation of the renminbi still an important tool for controlling inflation this year.

Others Machines

Floor Mop,Chain Block,Chain Hoist

Ductile iron pipe fittings CO.,Ltd , http://www.ns-valve.com