Offshore RMB Strong Rebound
On the evening of January 20, the offshore RMB rose sharply against the US dollar, successively breaking through the 7.31, 7.30, 7.29, 7.28, and 7.27 levels, with an intraday increase of nearly 750 points, approaching the 7.26 level. This strong performance has attracted widespread market attention and is considered to be the result of recent changes in Sino-US policy dynamics and market expectations.
Industry experts believe that after US President Trump took office, his statements on trade policy have softened, providing some support to the RMB exchange rate. Meanwhile, Chinese regulators have recently sent strong signals to stabilize the exchange rate, laying the foundation for the RMB stability through policy adjustments.
Policy and Market Dynamics
Reports indicate that Trump plans to issue a trade policy memorandum directing federal agencies to study trade relations but will not immediately implement tariffs on the first day in office. This stance is softer than during the election campaign. China International Capital Corporation's foreign exchange team points out that the key to the RMB exchange rate lies in the timing and intensity of US tariff policies against China. The market's easing uncertainty about tariff policies also provides an opportunity for non-US currencies to rebound.
Meanwhile, Chinese regulators have become increasingly clear about their stance on exchange rate stability. Recently, the central bank has strengthened expectations management in the foreign exchange market through measures such as issuing offshore RMB bonds and adjusting cross-border financing macroprudential regulation parameters. In addition, several senior officials have publicly reiterated their determination to stabilize the exchange rate, further boosting market confidence.
Steady Exchange Rate Policy Unwavering
CICC's foreign exchange team believes that the policy to stabilize the exchange rate will remain strong. At a news conference on January 14, central bank deputy governor Xuan Changneng clearly proposed "three determinations," including resolutely preventing large fluctuations, resolutely maintaining RMB exchange rate stability, and resolutely guiding market expectations.
Fan Ruoying, a researcher at the Bank of China Institute of Research, stated that although external pressure persists, China's economic fundamentals are stable, and sufficient regulatory tools are in place, making a large unilateral depreciation of the RMB unlikely. The recently raised macroprudential regulation parameter for cross-border financing is considered an important tool for financial regulators to reasonably guide exchange rate expectations.
Experts Outlook on RMB Exchange Rate
Experts generally hold an optimistic view of the future trend of the RMB. Zhao Qingming, deputy director of the Forex Information Research Institute, believes that the softening of Trump's policies and differences in market expectations together contributed to the stabilization and potential rebound of the RMB. Additionally, the recent strong performance of non-US currencies such as the yen, euro, and pound further consolidates market confidence in the stability of the RMB exchange rate.
