The RMB exchange rate was under pressure in early trading on Friday. The strengthening of the dollar and the rise in risk aversion sentiment pushed the RMB spot exchange rate against the dollar down by nearly 130 points.
The official midpoint rate was reported at 6.9007 yuan, approximately 120 points weaker than market model predictions. The market generally believes this indicates regulators are continuing to release stabilization signals through the midpoint to prevent excessive fluctuations in the renminbi.
Meanwhile, the long-term swap price of the dollar against the RMB fell to a six-month low. As the market continues to postpone the timing of the Federal Reserve rate cut, the inversion of the China-US interest rate spread continues to widen.
Federal fund futures show that the market currently expects the Federal Reserve to cut rates by about 20 basis points by the end of the year, far below the previous expectation of nearly 50 basis points.
Analysts believe that in the short term, the RMB trend will be more influenced by the dollar's movements and geopolitical factors, but China's economic fundamentals still provide some support for the exchange rate.
