Pegged to a basket of currencies the analogy exchange rate index is relatively stable, less volatile, and can make more stable and effective exchange rate of RMB pegged to a basket of currencies.
Effective exchange rate index rose slightly
According to the reports of the Chinese network, the second quarter of 2012, Fudan RMB effective exchange rate showed a slight upward trend in the shock.April shocks slightly lower, larger appreciation in May, fell back in June.Compared to 2000 has been at historically high levels. Pegged to a basket of currencies the analogy exchange rate index is relatively stable, less volatile, and can make more stable and effective exchange rate of RMB pegged to a basket of currencies.
As of the end of June, the the Fudan nominal effective exchange rate index is 124.40, up 2.39 percentage points from early season 122.01, or 1.96%; the highest and lowest points of 124.75 and 121.62, respectively, with an amplitude of 2.57%. Fudan RMB real effective exchange rate index of 129.42, up 2.52 percentage points from early season 126.90, or 1.99%; the highest and lowest points of 129.73 and 126.02, respectively, the amplitude of 2.94%. Fudan RMB is pegged to a basket of currencies analogy exchange rate index fell 0.47 percent, and the gap between the nominal effective exchange rate index expanded.Analog of the amplitude of the exchange rate index is only 1.60% less than the volatility of the effective exchange rate index.
As can be seen from the figure, the RMB effective exchange rate index in the second quarter of each month trend characteristics vary:
April, the RMB effective exchange rate index remained stable in the shock.Nominal effective exchange rate index was up 0.14 percentage points in April; real effective exchange rate index edged down 0.35 percent.
May nominal effective exchange rate index rose 1.86 percent; the real effective exchange rate index rose 2.24 percent. May most of the basket of currencies, the RMB appreciation, such as the Russian ruble appreciated by 10.87 percent, 6.42 percent against the Australian dollar, appreciated by 5.51 percent against the euro against the pound appreciated by 3.87%; on a few major currency devaluation against the U.S. dollar depreciated by 0.97 percent. depreciated by 3.77 percent against the yen. Appreciation of the currency and a significant reduction in the effective exchange rate of RMB will rise sharply, the highest point of the real effective exchange rate index of 129.73, a record high.
June, the RMB effective exchange rate index finished lower volatility. The volatility of the nominal effective exchange rate index was 0.96 percent, the volatility of the real effective exchange rate index was 0.90 percent. Yuan lower for most of the basket of currencies in June, but against the U.S. dollar, Japanese yen, Brazilian real and other currencies to appreciate, so the effective exchange rate of RMB remained stable in the shock.
The core index, showing the "W" shape trend
Overall, in the second quarter of the yuan core index showing a "W" shape trend, namely a balanced shock, there is no clear trend. Quarter-end closing price of 118.0224, only than the start of the season to the closing price of 118.3371 rose by 0.3147 percentage points, an increase of only 0.27%. RMB core index, the lowest point of the second quarter appears in the May 1, 117.0877, the highest point for the April 6, 118.7904, both only a difference of 1.7027, the overall volatility in the second quarter was 1.45% decline compared to the first quarter of blessing .
The amplitude and rate of appreciation of the yuan core index is much smaller than the effective exchange rate index, mainly due to the core index, the euro, the pound devaluation part, the yen and the Hong Kong dollar appreciation of the offset.
Yuan core index closing price in early April 118.3371,4 the end of the closing price of 117.3491, a decrease of 0.83%. April, the RMB against the euro, the dollar to appreciate slightly against the Japanese yen and British pound depreciated slightly, so the yuan core index showed a slight down trend.
RMB core index began to rise in May. The end of May, the yuan core index, 117.9536, up 0.71% compared with the beginning of. From the bilateral exchange rate of RMB against the U.S. dollar, the yen depreciated slightly against the euro, pound sterling appreciation of RMB core index, the overall upward trend.
June of RMB against the U.S., Europe, Japan, Britain and other major currencies remain volatile, so the yuan core index, no significant change in trend.
Outflow of funds caused the devaluation of the currencies
Changes in the perspective of the RMB against a basket of currencies, the yuan depreciation against the yen and the Philippine Peso larger depreciation rate of 3.94% and 2.14%, only 0.48% and 0.60% depreciation against the U.S. dollar and the Hong Kong dollar; on the Russian ruble, India Rupee Iranian Rial, Swiss franc, the euro appreciation of more than 5%. This fully shows the second quarter of substantial capital outflows from emerging economies, leading to the sharp depreciation of its currency. The current reference to a basket of exchange rate formation mechanism of the RMB is still the main reference to U.S. dollars, less fluctuation against the U.S. dollar against the euro, yen, pound sterling and a large number of emerging economies, currency fluctuations more intense.
Exchange rate changes and currency weights
The ultimate impact of the basket of currencies exchange rate movements on the RMB effective exchange rate of its weight. Trade weights of more than 5% Currency: euro, dollar, Japanese yen, the Hong Kong dollar, Korean won and Taiwan Patacas, respectively, 18.01%, 14.28%, 10.99%, 8.78%, 8.10% and 5.15%. Compared with the first quarter, the top six currency other than U.S. dollars and won the right weight increased by 0.62% and 0.24% outside of the weights of the remaining currencies are shown a downward trend, including the Taiwan dollar and the yen fell. 2.85% and 1.69% respectively. Currency of the weight of the chain rose more than 5% of the Saudi Riyal and the Russian ruble.This reflects the financial crisis, bilateral trade between China and emerging market countries and regions show a steady growth momentum of development.
Considering the second quarter of 2012 the nominal effective exchange rate index rose to contribute more than 10 percent of the currency euro, Cuellar, Brazil, the Russian ruble, and Indian Rupee, respectively, 55.05%, 17.09%, 15.37% and 11.91%. A result of currency RMB effective exchange rate index fell less negative to the contribution rate and the yen, the dollar and the Hong Kong dollar, were -33.16%, -7.04% and -4.67%. Taken down, the nominal effective exchange rate index rose 1.96 percent.
Began to decline in the relative price index
The relative price index is a measure of relative price levels between countries and regions in China with the sample, which is determined by the relative gap between China and the sample of countries and regions, the CPI. China's CPI rose by more than a sample of countries and regions weighted CPI rises, the index rose, on the contrary decreased. Higher inflation after 2011, the CPI has been a steady fall in the CPI in April and May 2012 were 3.4 and 3.0. The relative price index and the CPI trends are similar, showing a continuing downward trend, China's CPI rise slower than the sample of countries and regions weighted CPI inflation rate. The relative price index has started to decline, the territory of the price rose little impact on the real effective exchange rate index, the rise was mainly caused by the nominal exchange rate movements.
Impact factor of four macroeconomic factors affect the trend
Overall, the second quarter of the central parity of RMB against the U.S. dollar depreciated by 0.88 percent, the highest since 1994, the maximum value.Through the analysis of the RMB effective exchange rate index of the constituent elements and its impact on the index, can be found in the main trend of the RMB exchange rate index of the second quarter of the dominant 2012 years of macroeconomic factors:
Factor 1: in-depth reform of the mechanism, two-way exchange rate fluctuations
April 16, 2012, the People's Bank of China to limit the volatility of the yuan against the dollar day trading to expand from 0.5% to 1%, this is since June 19, 2010, the RMB exchange rate formation mechanism reform and restart the RMB exchange rate formation mechanism important reform. Characteristics of the bi-directional fluctuations of RMB yuan successive rise in early May, the record exchange reform, followed by shock downstream. Exchange rate fluctuation range is expanded, the market did not immediately respond to until the last trading day of April, the yuan against the dollar for the first time exceeded 0.5%, and for the volatility of the four sessions of more than 0.5%, but the largest fluctuations of only 0.65% far from close to 1% of the maximum volatility.
June, the yuan fluctuations increase, each trading day were higher than 0.5% relative to the volatility of the central parity, and the closing price was higher than the central parity, the inter-bank market, the continuous depreciation of the RMB against the U.S. dollar. Overall, the second quarter of the central parity of RMB against the U.S. dollar depreciated by 0.88 percent, the highest since 1994, the maximum value.
Factor 2: Europe's debt crisis, intractable, political risk is cumulative
European sovereign debt problem is caused by one of the main factors of the international foreign exchange market turmoil. The eve of the Greek general election, the possibility of far-right party came to power to make the euro under tremendous pressure. In the end, the support of the euro zone aid plans and commitments will continue to tighten policy, the backbone of the right-wing New Democratic Party will preside over the formation of the government to temporarily defuse the risk of Greece out of the euro. As the deterioration of the euro zone's fourth largest economy, Spain's economic situation affected by the austerity program, the country's economy into a second recession since 2009, and sovereign credit and banking rating down a series of banking industry is facing the full risk of bankruptcy .
Ultimately, in order to achieve the reorganization of assets of the banking sector, Spain to the euro area to seek assistance, have become the fourth since the debt crisis in Europe is by far the largest, to seek assistance economies. Debt crisis drags on, the European economy suffered, and the resulting accumulation of political risk may be more dangerous than the deteriorating fundamentals.
Factor 3: US-Japan economic rebound, the capital flow of returnees
U.S. economy performed better, the large amounts of capital back to the U.S. dollar to remain high, the dollar index has recently been maintained above 80; Although the Japanese economy did not get rid of the stagnation of the "curse", but no risk of collapse, and Japanese government bonds as safe assets, so the yen is also an important currency to attract hedge capital, and the continuous inflow of capital to remain strong. Different to the U.S. dollar, the yuan against the yen volatility and there is no clear limit, so the yen against the magnitude of the appreciation of the renminbi.
Factors: emerging markets, capital outflows, currency depreciation is obvious
Today (2012) in the second quarter, subject to the debt crisis in Europe continued to deteriorate and the global risk of "double dip" panic increase of global capital, the sharp drop in risk appetite, while the growth rate of emerging market economies slowing down significantly less attractive to international capital have to withdraw from emerging markets and high-risk assets to flock to safe assets. In the BRIC countries, the size of the Brazilian capital outflows and 2008 level; first five months of the Russian net capital outflow of $ 46.5 billion, an increase of 44.4 percent over the same period last year; India's foreign exchange reserves also appears to reduce the large-scale, and because of double surplus serious international credit rating outlook by Fitch as negative.Specifically, second quarter of the Brazilian real against the yuan depreciated by 13.01 percent 11.35 percent, the Russian ruble devaluation of the Renminbi, the Indian rupee depreciated by 9.79 percent against the RMB, is the depreciation rate of the three currencies in the basket of currencies.
Tendency in the effective exchange rate index hovering
April since the exchange reform, the RMB exchange rate fluctuations has expanded, the trend of a slight depreciation of the nominal exchange rate against the U.S. dollar. However, due to the RMB against the U.S. dollar by central parity bound market forces is difficult to play a decisive role, the RMB effective exchange rate index has hit a new high and high and volatile.Comprehensive current domestic and foreign economic situation, if the RMB exchange rate formation mechanism is not substantive reform, the RMB soft peg to the dollar situation does not improve, the effective exchange rate index is still hovering at a high, and may continue to hit a new high with the appreciation of the dollar.
First, the U.S. economy recovers, short-term support for a strong dollar. The OECD's latest survey report showed that U.S. consumer spending has improved over 2011's weak status, business investment continues to achieve stable returns, investment in housing shows signs of steady recovery, and is expected today (2012) The United States will achieve 2.4 percent of GDP growth, this growth rate is much higher than Europe and Japan, formed a strong support against the U.S. dollar. The same time, the base is solid economic recovery, the possibility of introduction of QE3 have lower, at least within a year the possibility of small, again the formation of support against the U.S. dollar. In addition, with the deterioration of the situation in Europe, there will be more capital back. So the short term the dollar will still remain strong.
Secondly, the European sovereign debt problem is likely to drag the euro lower.The just-concluded EU summit, Germany has been on how to use the relief fund made concessions to allow direct relief through ESM banks to avoid the deterioration of the Government's sovereign credit risk. Market sentiment temporarily appeased, but the lack of details, in particular, there is no fundamental solution to the crisis, the future still will be crisis-prone. Although the European sovereign debt crisis and danger, but we think that the collapse of the euro area does not, the euro will not collapse, because the many initiatives that can save the euro, but the euro zone leaders have chosen the most difficult road. Compared with the collapse of the euro, European Central Bank to assume the role of "lender of last resort", or issue a Eurobond, are an acceptable option.Just confined to the mainland's domestic public opinion leaders in resolving the euro zone debt problems will still be a bargain exacerbate market turbulence and the weak euro.
Again, the currencies of emerging market countries still face the risk of depreciation. The one hand, the economy of Brazil, India and other emerging market countries, downside risks to international capital gravity dropped significantly, and inflation to reduce the rate cut to provide space, will further reduce the attractiveness of the capital; the other hand, with the European the deterioration of the sovereign debt crisis, risk aversion will further enhance the probability of international capital to further outflows from emerging market countries.
Fourth, the RMB against the dollar space is limited. As the debt crisis in Europe caused by reduced foreign demand, China's exports are subject to certain constraints, economic growth is affected to some extent. At the same time, economic restructuring and growth patterns need to eliminate backward production capacity, expand domestic demand and foster new modes of production and economic growth point, the speed of economic growth in the short term will be somewhat lower. China's economy can still maintain a high growth, attractive for international capital is still high, so no large-scale capital flight. Despite the expected devaluation of the RMB, the yuan does not have the sharp depreciation of the economic base. Moreover, the exchange rate issue has become the focus of the political game, once the RMB exchange rate to a substantial devaluation was inevitable attack the United States, Japan and other countries and international capital, the devaluation of the RMB space is limited.
Fully visible, Fudan RMB effective exchange rate index in the coming months will remain at a high level, and possibly a new high with the deterioration of the economy of sovereign debt problems in Europe and emerging market countries.In the case of the current territory of sluggish domestic demand, the decline in external demand, China should further improve the exchange rate formation mechanism, a moderate expansion of the volatility of the yuan central parity rate against the U.S. dollar, to gradually reduce the excessive dependence of the yuan against the dollar, thereby reducing the RMB against the substantial non-US currencies fluctuations on the stability of China's foreign trade and promote the internationalization of the RMB is important.
