What are the benefits of RMB's counter cyclical factor?
The word "countercyclical factor" may not be well reflected, but the news that RMB has been added to the countercyclical factor is quite familiar to all of you. What is the significance of adding the countercyclical factor to the RMB and what is the benefit to the RMB itself? This question must be the most concerned topic. Today, fortune foreign exchange editor will tell you the reasons for this.
The counter cyclical factor is dynamically adjusted according to the changes of macroeconomic and other fundamentals, which is conducive to guiding the market to pay more attention to fundamentals in the formation of exchange rate. It can moderately hedge the pro cyclical fluctuation of market sentiment and alleviate the herding effect that may exist in the foreign exchange market. Since the exchange rate changes on August 11, 2015, the formation mechanism of central parity has been constantly adjusted and improved. The overall improvement direction is to weaken the impact of closing price on the middle price. This is because under the expectation of RMB devaluation in the past two years, the existing middle rate formation mechanism is easy to strengthen the depreciation expectation. The result of the depreciation of the closing price of RMB against the US dollar on the previous trading day is easy to lead to the continued depreciation of the middle price on the next day, forming a procyclicality, which is easy to enlarge the unilateral market expectation and increase the risk of exchange rate overshoot.
At the same time, with the ups and downs of the US dollar index, the exchange rate value of RMB against the US dollar also fluctuated. The US dollar index fell up and down, and the exchange rate of RMB against the US dollar fluctuated in a narrow range, always trying to break through the historical highs in the past. Although the exchange rate of RMB against the US dollar is now rising, it has something to do with the higher demand for foreign exchange purchase from domestic real-time customers recently, although the willingness to settle foreign exchange has been strengthened. In the case of speculative customers being squeezed out, a large number of foreign exchange purchases of real-time customers have suppressed the appreciation space of RMB exchange rate.
Therefore, to sum up, adding the countercyclical factor to the RMB can further weaken the impact of the closing price, thus reducing the patching measures expected by the unilateral market. After adding the counter cyclical factor, the situation that the long-term exchange rate value of RMB does not rise has been effectively improved. Of course, the appreciation of some industries is a pull, on some industries to bring a real impact. Therefore, we need to look at this result dialectically.