Home » RMB/USD falls below 7.2, the main reason for devaluation and where are the biggest risks – BBC News 中文

RMB/USD falls below 7.2, the main reason for devaluation and where are the biggest risks – BBC News 中文

by archyde

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On September 28, the offshore USD/CNY exchange rate fell below 7.2, the lowest value of the RMB since the data was available in 2011; it was also the lowest value of the onshore USD/CNY exchange rate since 2008.

Recently, the RMB has been depreciating against the U.S. dollar. On September 15, the exchange rate of the U.S. dollar against the RMB broke through the psychological barrier of “7”. However, the depreciation accelerated after that, breaking through 7.2 in less than two weeks.

The rapid devaluation of the renminbi has also led to the intervention of the central bank in the foreign exchange market. Since September 28, the foreign exchange risk reserve ratio of forward foreign exchange sales business has been raised from 0 to 20%, but it has not prevented the breakthrough of 7.2 on the same day.

According to the analysis, an important reason for the sharp rise in the dollar is the large-scale tax reduction policy in the United Kingdom, which has caused the pound to plummet. On the evening of the 28th, the Bank of England came to the rescue and announced the temporary purchase of long-term British government bonds. On September 29, the USD/CNY exchange rate returned to 7.15, up more than 1,000 basis points from the lowest point.

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