Baidu Finance: Declining trend of RMB exchange rate

On August 18, according to the market trend chart, today, the offshore RMB exchange rate "opened low and moved low" and fell slightly. As of now (14:17), the offshore RMB exchange rate has fallen by 234 points, or 0.34%. .

 

 

However, in the first two days (August 16-August 17), the offshore RMB exchange rate rose by 269 points, or 0.39%. That is to say, today, the decline of the offshore RMB exchange rate is about to swallow up the gains of the previous two days. Does this mean that the offshore RMB exchange rate will not rise and will continue to fall?

 

Regarding this issue, the editor thinks that today, even if the offshore RMB exchange rate "opens low and moves down" and falls slightly, it will devour the gains of the previous two days. However, this does not mean that the offshore RMB exchange rate will not rise, and will continue to fall.

 

Today, the reason why the offshore RMB exchange rate "stopped its rise and turned to fall" is most likely caused by the minutes of the July Open Market Committee's interest rate meeting disclosed by the Federal Reserve at 2 a.m.

 

 

Because the minutes of the Fed’s meeting on interest rates disclosed today are basically in line with the views expressed by Powell after the July policy meeting. Powell said that the Fed may turn to smaller rate hikes next, and also reminded that September may continue to take "unconventionally large" rate hikes.

 

Powell's "smoke bomb" made investors in the market "confused." However, judging from the trend of the offshore RMB exchange rate today, investors seem to have chosen the market expectation of a 75 basis point rate hike in September.

 

In addition, in July, the Federal Reserve has raised interest rates by 75 basis points, and inflation in the United States also "falls back" in July. However, it is still above 8%, indicating that inflation in the United States is still "high". Against this background, This has caused the Fed to continue to raise interest rates by 75 basis points in September.

 

 

According to reports, at present, the probability of the Fed raising interest rates by 75 basis points in September has increased by 5% to about 43%, while the probability was around 38% some time ago.

 

Now, although the market sentiment of the Fed raising interest rates by 75 basis points in September has caused the offshore RMB exchange rate to "turn down" again, the editor believes that in September, the probability of the Fed turning to a small interest rate hike is very high.

 

In July, after the Federal Reserve raised interest rates by 75 basis points, the benchmark interest rate in the United States has returned to the "neutral level", that is, the range of 2.25%-2.5%.

 

 

Combined with the recent economic data released by the United States, if the Federal Reserve continues to raise interest rates by 75 basis points in September, then the US economy will inevitably slow down, or even fall into recession.

 

Yesterday, the monthly rate of July retail sales announced by the United States was not only "lower" than market expectations, but also decreased by 0.8 percentage points compared with the previous value.

 

The data showed that the monthly rate of US retail sales in July was 0, the expected value was 0.10, and the previous value was 0.8%. As we all know, the United States is a country with a trade “surplus”, and its economic growth mainly depends on domestic consumption. Raising interest rates will only make the US economic growth worse. Therefore, in this context, the Federal Reserve will also consider the current state of the US economy. of.

 

Blindly curbing inflation is very likely to accelerate the slowdown of the US economy, or even fall into recession. At that time, even if the Fed "cuts interest rates" again, it will take time for the U.S. economy to "recover". As the saying goes, be careful to sail the ship for thousands of years. In the future, the word "stable" will be at the forefront, which may be the best choice for the Fed to raise interest rates.

 

 

That said, in September, the Fed's choice to move to a smaller rate hike is a wise choice. From the current point of view, after all, the US inflation in June has "peaked", which has eased the Fed's inflationary pressure.

 

The data showed that the annual rate of the US CPI was 8.5% in July without seasonal adjustment, the expected value was 8.7%, and the previous value was 9.1%.

 

Therefore, the editor believes that as time goes on, investors will gradually wake up and reduce the market expectations of the Fed raising interest rates by 75 basis points in September. Therefore, the editor believes that today, even if the offshore RMB exchange rate "opens low and moves low" ", fell slightly, and is about to swallow the gains of the previous two days, but this does not mean that the offshore RMB exchange rate will not rise and will continue to fall.