2023-05-20 01:07:41
The onshore yuan fell 0.3% on the 19th to 7.057 yuan per dollar, continuing this week’s losing streak. The yuan has fallen 4 percent against the dollar since late January. In addition, while the Japanese stock market was rising steadily, the Chinese stock market fell on the 19th.
Analysts at Nomura and Societe Generale were quoted by Archyde.com as saying that the yuan was likely to weaken further against the dollar, reaching 7.3. Kiyong Seong, Asia macro strategist at Société Générale in Hong Kong, sees the weaker yuan as a result of disagreements over U.S.-China monetary policy and China’s lackluster economic growth.
Chinese data for April showed weak consumer spending and industrial production, as well as a record youth unemployment rate. The data cast doubt on the health of the Chinese economy. Markets had expected a strong rebound in China’s economy after easing stringent zeroing restrictions last year.
Just as China’s economic recovery is under pressure, in April, the Chinese Communist Party’s official media and other mainland media reported that “countries around the world are pushing to abandon the dollar”, “the internationalization of the renminbi is increasing”, and “the BRICS countries will Create a new currency to get rid of the dollar”, and so on.
In this regard, Xie Tian, a marketing professor at the Aiken School of Business at the University of South Carolina in the United States, believes that the idea of the renminbi replacing the U.S. dollar is a bluff, “because the renminbi must be freely convertible before it can become an international currency.”
Regarding the RMB exchange rate breaking 7, Xie Tian analyzed, “If you look at it purely from the numbers, there is actually no difference between breaking 6.995 and breaking 7. But this 7 is a big psychological barrier, and now I can’t hold it anymore. What does it mean? First of all, China’s economy is in severe recession, especially in the decline in both imports and exports, and the growth rate of imports and exports has declined. This means that the driving force to support the strengthening of the RMB is insufficient, and it will depreciate. Break 7.”
“There is another one. Of course, the CCP also wants to maintain the 7, so it uses a large amount of foreign exchange to support the renminbi. But now it seems that the foreign exchange reserves are almost used. Foreign exchange is in short supply, and it is difficult to support it now, that is to say The question of whether the renminbi dares to continue to be pegged to the U.S. dollar may be a major practical issue now. If it cannot be pegged? The renminbi may plummet and continue to depreciate sharply. If it is soon, the United States will also accuse the CCP of deliberately devaluing it to stimulate exports. If this is the case, the United States will not agree, so China will continue to get into such a trouble.” Xie Tian added.
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