Increased costs of enterprises with RMB rising and falling

 The yuan rose again, rising to 6.73 on September 17, a record high after April 2019.

Deviations from the present value of the exchange rate from depreciation expectations

CNMOULDING post that the renminbi depreciation expectations increased, as recently as the renminbi appreciation, here mold manufacturing economic enthusiasts try to explain as clearly as possible the difference between depreciation expectations and exchange rate present value.

1) depreciation expectations. 

The exchange rate depends on the relative strength between the two currencies, and the depreciation expectation is the possibility that the market thinks one currency will depreciate against another in the future. Interest rate parity relationship, if the market believes that a country's currency has depreciation expectations, then capital outflow arbitrage will promote its currency interest rate rise, until the arbitrage space disappears, interest rate rise can compensate for depreciation expectations. Therefore, depreciation expectations can be accurately measured by fluctuations in the spread between the two currencies. Although the current RMB exchange rate is basically flat with April 2019, the Sino-US spread has expanded from about 60 basis points at that time to the current 246.9 basis points. This is a significant increase in depreciation expectations data quantification.

2) the present value of the exchange rate.

 Exchange rate present value = depreciation expect other effects (spread, central ticket, consumption of external storage hard pull, regulation, etc). The present value of the exchange rate covers depreciation expectations but is different from depreciation expectations. The depreciation expectation does not necessarily depreciate, other effects can cover the depreciation expectation, the exchange rate will not depreciate but also appreciate, which is the reason for the current RMB appreciation.

 However, if the means of maintaining the exchange rate without depreciation are not sustainable, the depreciation expectation will be a grey rhinoceros risk, but the risk landing will be affected by the dual influence of control ability and market sentiment, and the mood will be changeable. is changeable.

Deviations from foreign exchange reserves and foreign exchange holdings

 For foreign exchange reserves and foreign exchange accounts, there are similar deviations.

 China's foreign exchange reserves rose $10.218 billion in August, according to dollar-denominated outgoing reserves.

But the central bank's foreign exchange share shows that in August, the foreign exchange share decreased by 3.825 billion RMB, and the foreign exchange account for 7 consecutive drops!

Generally speaking, changes in foreign exchange reserves = changes in the nominal value of foreign exchange assets.

 A decline in foreign exchange accounts for a real outflow of foreign exchange; the increase in foreign exchange reserves is a rise in nominal value in dollars (but in SDR, the nominal value of foreign exchange reserves is reduced).

 The 7 consecutive decline in foreign exchange is the performance of the continued flow of foreign exchange, is a further confirmation of depreciation expectations!

External promotion

After that, the yuan has appreciated 3.2 percent of the dollar, that is,3.2 % of the external appreciation; after that, the previous August CPI average 3.53 %, that is, the internal depreciation 3.53%.

And the U.S. CPI average of 1.2% in the previous August, it was clear that the dollar's purchasing power fell less than the renminbi.

In terms of purchasing power parity, more currencies with lower purchasing power have the potential to depreciate (which is why the renminbi is expected to depreciate), but in fact, the renminbi has risen by 3.2 percent.

For export enterprises, this year's rise and decline will increase the cost of enterprises by 6.73% macroscopically, and the survival rate of export enterprises will be greatly tested. For example, our injection mold manufacturers and plastic injection products supply companies use overseas markets to cook this deviation will suppress export earning capacity, resulting in this deviation trend can not be sustained.