Caixin reported on July 10th that the mid-point price of USD-RMB exchange rate reached 7.1342. Experts in the industry said that the mid-point price of USD-RMB exchange rate was raised by 32 basis points compared with the previous trading day's 7.1310, which was understood by the market as the People's Bank of China allowing further appreciation of USD-RMB exchange rate, that is, the depreciation of Renminbi.

Over the past three months, the Renminbi exchange rate has orderly released the depreciation pressure accumulated in the previous period. In the current adjustment process, the core resistance level above 7.11 may be 7.15.

Affected by factors like the inversion of Sino-US interest rate, the USD-RMB exchange rate has depreciated slightly in June. However, experts pointed out that the overall good fundamentals and rich exchange rate management tools will ensure the stability of Renminbi exchange rate at a reasonable and balanced level in the second half of the year. It is expected that the future USD-RMB exchange rate will fluctuate in both directions within the range of 7.1-7.3 for most of the time.

The midpoint has been continuously raised, and the key point may be 7.15.

The People's Bank of China authorized the China Foreign Exchange Trading Center to announce that the mid-point price of USD-RMB exchange rate was 7.1342 today, up 32 basis points from the previous trading day, when it was 7.1310.

Wang Yang, an expert in foreign exchange strategy and the general manager of Beijing Huijin Tianluo Risk Management Technology Co Ltd, told Caixin that today's USD/RMB mid-price increased by by 32 basis points to 7.1342. This may have an impact on the short-term onshore Renminbi exchange rate.

"According to the current Renminbi exchange rate pricing mechanism, the daily fluctuation of onshore USD-RMB exchange rate does not exceed 2%, which means that today's highest price of USD-RMB exchange rate can rise to 7.2768, exceeding the high point of 7.2735 on July 3rd. The market can easily understand this as the People's Bank of China allowing further appreciation of USD-RMB exchange rate (the depreciation of Renminbi)," Wang Yang explained. Therefore, the onshore Renminbi opening price directly rose to 7.2755 today.

In fact, the midpoint of Renminbi exchange rate has been steadily raised over the past period of time. On May 24th, USD-RMB exchange rate midpoint reached 7.11 for the first time, and a month later, on June 24th, it officially broke through 7.12. After entering July, the mid-point price rose again to 7.1312 on July 3rd.

"This shows that there is still a certain degree of depreciation pressure on Renminbi at present, and the trading price of China's interbank foreign exchange market has been maintained at a level of the mid-point price * 1.02 for a period of time. In order to adapt to the market trend, the People's Bank of China gradually adjusted the Renminbi midpoint, which just reflects the unique managed floating exchange rate system of our country," said industry insiders in an interview with Caixin.

Lu Zhe and his team at Fangzheng Macro said that over the past three months, Renminbi exchange rate management strategy has quietly changed, and the Renminbi exchange rate has been orderly releasing the depreciation pressure accumulated in the previous period.

Lu Zhe's team also pointed out that the increase in the Renminbi exchange rate midpoint is gradually opening up the upper limit of the spot exchange rate volatility. "From early 2024 to July 5th this year, there have been a total of 124 trading days in the foreign exchange market, of which 59 have deviated from the mid-point exchange rate by more than 1.8%, mainly concentrated in the five-month period from February to now. After May, with the gradual increase in Renminbi mid-point price, the spot exchange rate market is also releasing the depreciation pressure accumulated in the previous period, and the offshore USD-RMB exchange rate has risen above 7.3."

Against the backdrop of the adjustment of the midpoint, the industry is also discussing the key point of 7.15 for Renminbi midpoint. Wang Yang said that the main resistance levels above USD/RMB are 7.3 and 7.35. If the midpoint reaches 7.1500, it means that it will rise to 7.2930 at most; If the mid-point price is higher than 7.15, the onshore price will exceed 7.30, which will have an impact on the short-term exchange rate trend.

Lu Zhe's team also pointed out that since May, the midpoint of Renminbi exchange rate has been gradually raised, breaking through the three tough obstacles of 7.11 to 7.13. This means that in order to prevent the formation of consistent depreciation expectations in the spot exchange rate of 7.20-7.30 range, the People's Bank of China stabilizes exchange rate fluctuation expectations by orderly releasing exchange rate depreciation pressure. In this round of adjustment, the core resistance level above 7.11 may be 7.15.

Multiple factors contribute to a smooth fluctuation, and it is expected that the future fluctuation range will be within 7.1-7.3.

Overall, the interest rate trends in Europe and the United States are contradictory, and factors such as better-than-expected employment data in the United States, a slight decrease in the US CPI growth rate, and the inverted yield curve between China and the United States have led to depreciation of the USD to RMB exchange rates in June, showing two-way fluctuations in the range of 7.1088 to 7.3032.

Wen Bin, chief economist of Minsheng Bank, said that the RMB has overall stable performance this year but has also endured some depreciation pressure. In addition, the settlement exchange rate has declined while the sale exchange rate has risen this year, indicating that there is still some expectation of RMB depreciation in the market.

"In the second half of the year, as the Fed's interest rate cuts take effect, the interest rate gap between China and the United States will tend to converge, and the attractiveness of RMB assets may further increase," Wen Bin said. On the whole, with the good fundamentals and rich exchange rate management tools, the RMB exchange rate will be stable at a reasonable and balanced level in the second half of the year. It is expected that the USD to RMB exchange rates will show two-way fluctuations in the range of 7.1-7.3 for most of the time.

The National Economic Research Center of Peking University believes that China's domestic economy continues to recover and Europe may pause rate cuts in July, but the inverted yield curve between China and the United States still puts pressure on the RMB. It is expected that the RMB exchange rate will be stable with a slight increase in July, and the fluctuation range will be 7.10-7.31.

"Overall, the recent onshore RMB trend is weak, mainly affected by its own fundamentals. However, in the slightly longer term, there is not much room for USD/RMB appreciation. With the Fed's interest rate cut in September approaching, it is expected that the USD will continue to show weak trends overall, ultimately leading to a fall in the USD to RMB exchange rates," said Wang Yang.