An important implication from the central bank

Offshore renminbi / dollar fell 0.2 percent to 6.6909, the dollar index rose in early New York trading, emerging market currencies and other risky assets primarily under increasing pressure; offshore renminbi currently only about 1% of the distance from the lowest level in 2016.

USD / offshore renminbi in June 30 record high of 6.7021 days, because there were reports that China’s central bank is willing to let the yuan before the end of the year fell to 6.8; exploration January 7 year reached 6.70 Powei may push the dollar / offshore yuan on highs 6.7618.

Analysis of the yuan central parity, “the day before the closing rate + a basket of currencies exchange rate changes,” the formation mechanism visible, the current central parity mechanism itself has played a filter to devalue, smoothing fluctuation effect. Since mid-February to July 4, 16:30 renminbi daily closing price the day most of the time than the weaker central parity, the cumulative depreciation of 2879 basis points, reflecting the downward pressure on market supply and demand-driven; the same period, the actual central parity accumulated depreciation of only 1158 bps.

OCBC Bank in Singapore economist Xie Dongming said that the current central parity mechanism has a smoothing effect, but can not seem to change Yindie yuan, and this will lead to unilateral fell devaluation pressure can not be completely digested. Administrative control, although government hopes to postpone purchase of foreign demand, is expected to wait for two-way volatility is formed to ease the purchase of foreign pressure, but if the actual market situation is not expected direction, will become “warm boiled frog” situation.

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