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特朗普交易带动美元指数持续走强,离岸人民币据7.25关口一步之遥,美元不弱如何对冲?

Trump's trade boosts the continuous strength of the usd, with the offshore renminbi close to the 7.25 threshold, how to hedge against the not weak USD?

cls.cn ·  Nov 12 12:59

① The offshore RMB experienced a sudden surge of over 150 basis points, approaching the psychological barrier of 7.25. ② In the future, it will be crucial to focus on whether the domestic stimulus policies related to internal demand can continue to maintain their strength in order to offset the impact of external risks on the RMB exchange rates.

This morning, driven by factors such as the expected strong performance of the US economic data in October, the US dollar index broke through the high point of 105.47 since July, leading to a continuous rise and depreciation of non-US dollar currencies, including the renminbi.

On November 12, the central parity rate of the renminbi against the US dollar was devalued by 141 basis points, closing at 7.1927, the lowest since September 12, 2023.

As of the time of publication, the offshore renminbi once surged more than 150 basis points to 7.2471, just a step away from the psychological threshold of 7.25; at the same time, the US dollar strengthened to the Japanese yen, Canadian dollar, and Swiss franc to varying degrees, with an increase of around 0.05%.

On November 12, a forex analyst from a Chinese institution in Hong Kong told Caixin that the latest economic data will be released on Thursday in the US. Currently, the market expects strong October data, which has reduced expectations of a rate cut by the Fed and a soft landing for the economy, boosting the market's bullish sentiment towards the US dollar.

Ming Ming, Chief Economist of Citic Securities, believes that after Trump's re-election, external disturbances or the renminbi exchange rate will be the biggest risk factor. With the dollar remaining strong, the renminbi exchange rate is expected to remain relatively weak. In the future, close attention should be paid to whether domestic demand-related stimulus policies can continue to maintain their strength to offset external risks to the renminbi exchange rate to some extent.

Furthermore, Ming Ming emphasized that the central bank has sufficient reserves for exchange rate stability tools, which helps prevent significant unilateral fluctuations in the renminbi exchange rate.

Exchange rate fluctuations intensify, with institutions calling for seizing the timing window.

According to the schedule, the United States will release the CPI and PPI data for October on November 13 local time.

Market expectations show that Bloomberg Economics economists like Anna Wong believe: "It is expected that both the US CPI and PPI will rise, pushing up long-term yields, and further suppressing the economy in the coming months. We expect the unemployment rate to continue to climb, reaching 4.5% by the end of the year."

On November 11, the latest report from China International Capital Corporation believes that the strength of the US dollar in the first half of the year is strongly related to the postponement of rate cuts and the upward trend in US dollar interest rates. The sharp decline in the third quarter was attributed to the restarting of rate cut trades and the resulting unwinding of carry trades. The re-rebound of the US dollar index in the fourth quarter to date is due to the back-and-forth of rate cut expectations under the impact of strong US economic data.

In China, on November 12, Jing Chuan, Chief Economist of East Asia Futures, believes that the recent massive bond issuance plan announced by China has accelerated market liquidity tightening expectations, putting pressure on the renminbi. Currently, the trend of renminbi depreciation is expected to continue.

Ming Ming, Chief Economist of Citic Securities, believes that since the beginning of this year, the relatively high level of goods trade surplus and the widening of the service trade deficit have jointly driven down China's current account surplus compared to last year. Considering the pressure on China's exports next year and the risk of additional US tariffs, coupled with the service trade deficit, which may continue to widen alongside the further recovery of cross-border travel demand, this trend is expected to continue.

In securities investment accounts, it is expected that capital outflow pressure may be concentrated in the equity market. Foreign capital continues the trend of significantly increasing holdings of renminbi bond assets. It is expected that the subsequent capital flow fluctuations in securities accounts will intensify, thereby enhancing the volatility of the renminbi exchange rate.

The latest data from the central bank shows that in October 2024, China's foreign exchange reserves were $3,261.1 billion when priced in US dollars, a decrease of $55.3 billion compared to the previous month, where there was an increase of $28.2 billion.

Regarding recent hedging strategies, Industrial Research released an opinion on November 11, stating that with the US election results settling, the 'Trump trade' has paused temporarily, and non-US currencies, including the Renminbi, will receive support. Especially significant to seize the limited window period before a marked decline in the US dollar exchange rate interest rate. Both buying and selling foreign exchange need active and flexible hedging, especially focusing on the period before the end of the election.

Stable exchange rate policy is waiting for an opportunity to exert force, and the impact of this round of tariffs may be weaker than the previous round.

In the September quarterly economic forecast, the Fed further expects that the core PCE inflation in the USA will decrease to 2.2% in 2025 and to 2.0% in 2026.

Based on this, analysts from China International Capital Corporation, including Li Liuyang, believe that in the short term, US inflation may further decline due to factors such as base effect and high interest rates. However, with the downward trend of interest rates and changes in the base effect, the year-on-year inflation rate may change later next year, leading to the end of the US dollar's downward cycle.

However, it is believed that with regard to domestic factors, in the case of weakened external demand expectations, if stimulus policies related to domestic demand continue to maintain their strength, they may partially offset the impact of external risks on the exchange rate of the Renminbi.

In the outlook for the exchange rates in 2025, China International Capital Corporation believes that due to significant differences in the macroeconomic and policy environment from the previous year, the impact of this round of tariff increases on the Renminbi exchange rate may be smaller than in 2018.

Analyst Li Liuyang believes that if economic expectations improve next year, cross-border capital is expected to flow into financial projects, partially filling the gap in the current account brought about by the reduction in the surplus of goods trade.

Furthermore, the central bank's stable exchange rate policy may provide support for exchange rate expectations. The Renminbi exchange rate expectations have remained relatively stable since the beginning of this year, with the stable exchange rate policy playing an important role. It is expected that next year, the stable exchange rate policy may still have the potential to exert force, and the devaluation space for the Renminbi exchange rate may be relatively limited.

Editor / jayden

The translation is provided by third-party software.


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