On January 6, the US dollar index fluctuated at a high level and reached its highest point in more than two years. Both the onshore and offshore RMB exchange rates fell below the 7.35 mark, drawing market attention. Meanwhile, the People's Bank of China plans to issue additional offshore RMB central bank bills in Hong Kong in January, further increasing the supply of high-quality RMB bonds and demonstrating the central bank's commitment to stabilizing the exchange rate.
According to industry analysts, recent strong demand from overseas investors for high-quality RMB bonds has prompted the central bank to increase the issuance of offshore RMB bills, with the expected issuance volume likely to far exceed the largest single issuance in the past. This move is regarded as an important signal for stabilizing the RMB exchange rate.
Mingming, the chief economist at CITIC Securities, stated that the US dollar has already fully reflected the market's expectations for interest rate cuts, Trump's inauguration, and potential tariff policies, suggesting limited short-term upward momentum. Meanwhile, the central bank has intensified efforts to stabilize the exchange rate through mid-rate quotations and offshore RMB liquidity management measures. It is expected that the RMB exchange rate will fluctuate narrowly around 7.3 in the short term.
Huaxi Securities pointed out that by 2025, the US dollar might remain strong, and the RMB might depreciate slightly against the dollar but remain relatively stable against a basket of currencies. The uncertainty in the future trend of the RMB exchange rate primarily stems from the pace and intensity of Trump's tariff policies. If the US dollar index operates within the 107 to 110 range, it is expected that the USD to RMB exchange rate will fluctuate between 7.3 to 7.5.
Overall, the RMB exchange rate is influenced in the short term by fluctuations in the US dollar index and domestic and international policy dynamics. Market participants need to closely monitor the global economic situation and the impact of China-US policy struggles on the exchange rate. The central bank's demonstrated capability in stabilization policy provides support for the stability of the RMB market.
