share
 

China may keep RMB stable if Fed cuts rates

0 Comment(s)Print E-mail China Daily, August 29, 2024
Adjust font size:

With the United States appearing to be poised for interest rate cuts starting September, Chinese policymakers should strengthen monitoring of capital flows and prepare contingency plans against any potential sharp renminbi appreciation, analysts said.

While a significant appreciation of the renminbi, or the yuan, against the US dollar is unlikely, they said they still expect Chinese financial regulators to bolster the management of expectations amid lingering uncertainties.

Measures such as adjusting the foreign exchange reserve requirement ratio may be taken to maintain the overall stability of the yuan in the event of any surge in speculative capital inflows.

Talk about the potential for a drastic yuan rebound started after Bloomberg published a report on Tuesday. Stephen Jen, chief executive of British hedge fund Eurizon SLJ Capital, was quoted in the report as saying that Chinese companies may be enticed to sell a $1 trillion pile of dollar-denominated assets if/when the US cuts interest rates, which could strengthen the yuan by up to 10 percent.

Jen's remarks came after US Federal Reserve Chair Jerome Powell indicated on Friday that "the time has come" for interest rate cuts. His words led the market to bet that the Fed will start cutting its target range of interest rates, which now stands at 5.25 to 5.5 percent, at the next Federal Open Market Committee meeting on Sept 17 and 18.

"In the event of a Fed rate cut, we anticipate a redirection of international capital flows toward China, potentially prompting a reflow of capital of Chinese enterprises," said Xiong Aizong, a senior research fellow at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences.

"However, the yuan appreciation may not be as pronounced as Jen expects. The People's Bank of China, the country's central bank, is likely to implement its own rate cuts as well. Moreover, the US rate cuts are expected to be a gradual process."

In an interview with People's Daily earlier this month, Pan Gongsheng, governor of the PBOC, said the central bank will maintain a supportive monetary policy stance and keep the renminbi exchange rate generally stable at a reasonable and balanced level.

Xiong said: "In the case of (any) yuan appreciation, the PBOC and other authorities would take measures to prevent sharp fluctuations in the yuan's value.

"This may include intensifying the oversight of capital movements to curb abnormal capital flows, implementing additional easing measures and strengthening the management of expectations to prevent a one-sided, substantial appreciation of the yuan."

The renminbi has recovered against the greenback on expectations of a US rate cut next month, with the central parity rate of the renminbi against the dollar standing at 7.1216 on Wednesday, strengthening from the Aug 13 trough of 7.1479. This year began with the rate at 7.0770 on Jan 2.

Liu Chunsheng, an associate professor at the School of International Trade and Economics, which is part of the Central University of Finance and Economics, said the market has formed a consensus on a weakening US dollar, leading to the recent yuan appreciation.

He said the resistance level for the renminbi against the greenback is anticipated between 7 and 7.05 in the near term, suggesting the yuan appears to be on track for a mild recovery.

Liu cautioned that any significant yuan appreciation could pose considerable risks. "The influx of hot money could impact China's capital markets, leading to certain levels of price increases and associated financial risks. With the yuan appreciating, exports may come under pressure as well."

Liu said that regulatory authorities are unlikely to ignore any sudden substantial appreciation of the yuan. Measures may be taken to moderate such pressures and fluctuations, such as increasing the reserve requirement ratio for foreign exchange deposits to maintain yuan stability without direct exchange rate intervention.

Follow China.org.cn on Twitter and Facebook to join the conversation.
ChinaNews App Download
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter
主站蜘蛛池模板: 亚洲国产老鸭窝一区二区三区| 一区二区日韩精品中文字幕| 欧美免赞性视频| 健身私教弄了我好几次怎么办| 翁虹三级在线伦理电影| 国产在线拍揄自揄视精品不卡| 男人天堂免费视频| 国内精品久久久久影院一蜜桃| se94se欧美综合色| 性宝福精品导航| 中文字幕人妻三级中文无码视频| 日韩一级欧美一级在线观看| 亚洲AV无码国产精品麻豆天美| 欧美成人精品福利网站| 亚洲精品亚洲人成在线播放| 精品久久久久久久久久中文字幕 | 中文字幕无线码一区二区| 日本精品久久久久中文字幕| 久久综合88熟人妻| 最近的中文字幕视频完整| 亚洲啪啪免费视频| 欧美日韩国产伦理| 亚洲欧美日韩高清在线看| 狠狠干2020| 你是我的城池营垒免费观看完整版 | 公添了我的下面出差牌友| 美国一级毛片免费视频观看| 国产jizzjizz视频免费看| 蝌蚪网站免费观看| 国产午夜三级一区二区三 | 就去吻亚洲精品欧美日韩在线| 中文字幕亚洲欧美专区| 成年女人色毛片| 久久777国产线看观看精品| 日产精品久久久久久久性色| 久久久久无码精品国产不卡| 日本尤物精品视频在线看| 久久精品国产99精品国产亚洲性色| 狠狠色综合一区二区| 国产精品毛片无遮挡高清| 69农夫和老妇重口小说|