What does RMB exchange rate

After more than two years, the exchange rate of RMB against the US dollar has once again depreciated through the "7" mark. The onshore yuan fell below the 7.0 mark against the US dollar early on Sept 16 and was last quoted at 7.0126 for the first time since July 2020. The offshore renminbi fell below the 7.0 mark yesterday evening and was last quoted at 7.0262.



So far this year, the renminbi has fallen 9.8 per cent against the dollar in the onshore market and the central parity rate has fallen 8.7 per cent. In 2022, the RMB exchange rate against the US dollar has experienced two rounds of depreciation. The current round of RMB exchange rate decline started when the central bank cut the medium-term Lending Facility (MLF) interest rate on August 15, and the US dollar index kept breaking 20-year highs.



Even though the market had expected it, the offshore RMB/US dollar exchange rate broke "7" that night still caused a lot of attention and discussion. As long as the market has been concerned about the exchange rate "psychological level" is broken, the market will inevitably produce concerns about whether the "7" will lead to the gathering of depreciation expectations, whether the exchange rate of the renminbi against the dollar will therefore decline significantly.



Although the recent short - term depreciation of RMB against the US dollar, and the short - term depreciation pressure still exists. But experts agree that there is no basis for continued depreciation. China's foreign exchange market operates normally, cross-border capital flows are orderly, and spillover effects of the US monetary policy are under control. The fundamentals of China's long-term economic growth remain unchanged, and the People's Bank of China still has sufficient tools to stabilize the exchange rate. The exchange rate issue will not impede monetary policy control. In the short term, two-way volatility should be the norm. In the long run, the world's recognition of the renminbi will grow.