The RMB exchange rate hits a new high in six months! Onshore and offshore RMB both rose above the 6.37 mark!

November 29, 2021

Latest company news about The RMB exchange rate hits a new high in six months! Onshore and offshore RMB both rose above the 6.37 mark!

The Turkish Lira exchange rate against the U.S. dollar fell from 8 to 10 in two months. At the same rate, if the RMB exchange rate falls from 6.3 to 8 within two months... I dare not think about it. After all, Turkey has been panicked by the devaluation of the currency, and the people are no longer living.

 

For my country’s export companies, of course, they hope that the renminbi will remain stable, because every point of appreciation means that our profits have been squeezed.

 

Imagine that in May last year, the spot exchange rate of the RMB against the US dollar began to rise after hitting the lowest value in the year of 7.15, until it stabilized below 6.4 in recent months, an increase of more than 10%.

 

On November 16, the spot exchange rate of RMB against the U.S. dollar rose after the opening at 6.3840, breaking through the 6.38 and 6.37 barriers in early trading, reaching as high as 6.3666, setting a new intraday high since June 1, and closing at 16:30. 6.3771, up 32 basis points from the previous trading day. This is the day closing price of the spot exchange rate of RMB against the US dollar, which hit a new high since June 2 for two consecutive trading days.

 

Since the beginning of this year, the RMB spot exchange rate against the US dollar has appreciated by 2.48%.

 

The exchange rate of offshore renminbi against the U.S. dollar, which more reflects the expectations of international investors, also rose above the 6.37 mark, and the cumulative appreciation since the beginning of this year has reached 1.96%.


On November 17, the central parity rate of the renminbi was reported at 6.3935, down 11 points.

 

5 and a half months new high

In fact, the U.S. dollar strengthened globally last week. The U.S. dollar index rose by nearly 1% month-on-month, reaching a maximum of 95.26, a new high since July 2020.

 

Among the major non-US currencies, the euro-dollar exchange rate hit a new low of 1.1433 for the year, down 1.1% throughout the week, and the pound against the U.S. dollar also fell to a new low during the year, with a decline of 0.6% throughout the week.

 

Generally speaking, the US dollar index rises and the RMB exchange rate against the US dollar weakens, but this time, the RMB is also strong.

 

Since September, the U.S. dollar index and the spot exchange rate of RMB against the U.S. dollar have shown a synchronized trend. In October, the renminbi appreciated 0.96% against the U.S. dollar, while the U.S. index fell only 0.11% during the same period.

The current renminbi exchange rate is thriving, steadily rising.

 

The main reason is the strong demand for foreign exchange settlement on the one hand.

 

Since August, China's domestic exchange rate has gradually increased, and the surplus in foreign exchange settlement and sales has also expanded. According to data from the State Administration of Foreign Exchange, in the first three quarters of this year, the settlement exchange rate, which measures willingness to settle foreign exchange, was 66.9%, 2 percentage points higher than the same period last year. Towards the end of the year, due to seasonal factors, the market demand for foreign exchange settlement is relatively strong, providing support for the RMB exchange rate.

 

At present, the domestic dollar deposits of Chinese companies have exceeded the $1 trillion mark.

 

On the other hand, China's continued export boom that exceeds expectations has also supported this. In October, my country’s trade surplus reached 84.54 billion U.S. dollars in U.S. dollars, a year-on-year increase of 47.5%, a record high.

 

In addition, the more important point is that the improvement in Sino-US economic and trade expectations has boosted market confidence in the renminbi.

 

According to Xinhua News Agency, President Xi Jinping held a video meeting with US President Biden on the morning of November 16. The two sides conducted full and in-depth communication and exchanges on strategic, overall, and fundamental issues related to the development of Sino-US relations, as well as important issues of common concern.

 

The U.S. seeks to reduce tariffs on some Chinese products

 

In October, the U.S. CPI increased by 6.2% year-on-year, far exceeding expectations, setting a 31-year record. This is also the fifth consecutive month that U.S. inflation has increased by more than 5% year-on-year.

latest company news about The RMB exchange rate hits a new high in six months! Onshore and offshore RMB both rose above the 6.37 mark!  0

"I put a price tag in the supermarket. This is the price increase I have seen recently"

 

It is worth noting that in October, the United States played a major role in my country's record trade surplus, because half of the surplus came from the United States-my country's surplus with the United States was as high as 40.7 billion U.S. dollars.

 

On November 14, CBS aired an interview with US Secretary of the Treasury Janet Yellen. At the time, the host Margaret Brennan asked: "China has repeatedly asked for the removal of Trump-era tariffs. If the Biden administration does this, can things become cheaper?" Yellen replied: "It will indeed have an impact. Tariffs will indeed increase domestic prices in the United States. We have set these tariffs." Yellen said that the Biden administration recognizes the requirement to reduce tariffs in certain areas, and tariff reductions are definitely under consideration.

 

Before the China-U.S. heads of state meeting, on November 12, 24 U.S. chambers of commerce and industry associations jointly sent a letter to high-level U.S. government trade officials, urging the White House to reduce tariffs on Chinese goods and expand the scope of import tariff exemptions to restore U.S. companies’ Competitiveness.

latest company news about The RMB exchange rate hits a new high in six months! Onshore and offshore RMB both rose above the 6.37 mark!  1

View the original text of the open letter:
https://www.uschina.org/advocacy/regulatory-comments-on-china/industry-letter-us-china-trade-and-commercial-relations

 

These business organizations include:

latest company news about The RMB exchange rate hits a new high in six months! Onshore and offshore RMB both rose above the 6.37 mark!  2

The open letter also specifically mentioned that because the United States imposed tariffs of up to 25% on Chinese imports worth more than 300 billion U.S. dollars, these tariffs have cost U.S. importers more than 110 billion U.S. dollars, of which 40 billion U.S. dollars was in Biden. Caused by the government.

 

US Treasury Secretary Yellen revealed that it is considering eventually reducing some tariffs in a "reciprocal way."

 

We also hope that we foreign traders can harvest the good news of "tax reduction" as soon as possible after experiencing the complicated 2021!