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Punch! RMB soared 900 points to 6.80, and the central bank restarted the "counter cyclical factor" and entered the appreciation channel!

page view：1500 time：[2018-08-27]

The exchange rate of RMB has changed again

In 2017, the counter cyclical factor that helped the RMB appreciate against the US dollar significantly officially announced its return to the Jianghu, and the RMB rose sharply in the onshore and offshore markets.

At 19:07 on August 24, the China Foreign Exchange Trading Center released a message that the quotation Bank of RMB against the US dollar was restarted with "counter cyclical factor". After the announcement of the news, both the offshore RMB and the onshore RMB rose sharply.

The offshore yuan soared 900 points, breaking the 6.8 mark

After the counter cyclical factor was restarted, the offshore RMB jumped 500 points. After the U.S. stock market opened, the offshore RMB jumped against the U.S. dollar in a straight line, breaking the 6.82 and 6.81 barrier one after another, and even breaking the 6.8 integer barrier at 23, rising 914 points in the day.

The onshore yuan surged 673 points, close to the 6.80 mark

The onshore yuan also soared in a flash. In the same day, it broke 6.85, 6.84, 6.83, 6.82 and 6.81 successively, and by the time of publication, the onshore RMB rose 673 points.

Where does the inverse periodic factor come from?

On May 26, 2017, in order to moderately hedge the pro cyclical fluctuation of market sentiment, the core members of the self-discipline mechanism of the foreign exchange market adjusted the middle price quotation model of RMB against US dollar from the original "closing price + exchange rate change of a basket of currencies" to "closing price + exchange rate change of a basket of currencies + counter cyclical factors" based on the principle of marketization.

The introduction of "counter cyclical factor" effectively alleviates the market's Pro cyclical behavior and stabilizes the market expectation. This is the first time that the central bank has introduced counter cyclical factors.

What is the inverse periodic factor?

According to the instructions of the central bank, when calculating the counter cyclical factor, the quotation line "can first remove the influence of the change of basket currency from the fluctuation of the closing price of the previous day compared with the middle price, so as to obtain the exchange rate change that mainly reflects the market supply and demand, and then get the" counter cyclical factor "through the adjustment of the counter cyclical factor", "the counter cyclical factor is changed by each quotation line according to the economic fundamentals and the forward cycle of the foreign exchange market The degree is set by yourself.

In short, the counter cyclical factor is to extract the market supply and demand factors in the previous day's RMB closing exchange rate changes through mathematical processing, and then filter this component at a discount.

What is the main function of the counter periodic factor?

As for the role of counter cyclical factors, according to the central bank's previous statement, that is, dynamic adjustment based on macroeconomic and other fundamental changes, is conducive to guiding the market to pay more attention to fundamentals in the formation of exchange rate, can moderately hedge the pro cyclical fluctuation of market sentiment, alleviate the "herd effect" that may exist in the foreign exchange market, and avoid the fluctuation and impact of international risks.

In fact, the introduction of counter cyclical factors by the central bank also creates a new way to intervene in the external market. With the counter cyclical factor acting on the "market supply and demand factor" in the middle price formula, the central bank's intervention in the foreign exchange market has entered a new stage.

Before the introduction of counter cyclical factors, the devaluation of RMB brought about by market supply and demand had no more than two exports: first, the central bank intervened in foreign exchange by consuming foreign reserves to directly manage market supply and demand; second, it offset the power of keeping the exchange rate stable against a basket of currencies in the formula of RMB to us dollar middle price, making the CFETS RMB exchange rate index depreciate.

After the introduction of counter cyclical factor, the central bank has another tool to manage the devaluation force of RMB brought by market supply and demand, that is, as mentioned above, to filter it through the counter cyclical factor.

When has the inverse periodic factor been used and what is the effect?

In May 2017, the central bank introduced the "counter cyclical factor" for the first time, effectively alleviating the market's Pro cyclical behavior and stabilizing market expectations. In the seven months of the implementation of the counter cyclical factor, the exchange rate of RMB against the US dollar rose from 6.86 to over 6.20, with an appreciation rate of about 10%.

Why do we restart the counter cyclical factor every 7 months?

At present, China's economy is stable and improving, the adjustment of economic structure has made positive progress, and the transformation of growth momentum has accelerated, the foreign exchange trading center said. Recently, due to the stronger US dollar index and trade friction and other factors, the foreign exchange market has some pro cyclical behavior. Based on their own judgment of the market situation, since August, the quotation banks of RMB against the US dollar have adjusted the "counter cycle coefficient" to moderately hedge the pro cycle sentiment in the direction of depreciation.

At the same time, it also released several signals. First, it determined the risk bottom line, suggesting that the current exchange rate level is close to the short-term equilibrium exchange rate, and regulators do not want the exchange rate to depreciate significantly again, which will impact market sentiment. Second, it also shows the confidence and determination of the central bank to stabilize the exchange rate. If the situation continues to deteriorate, other means cannot be excluded.

What is the trend of RMB exchange rate after counter cyclical factors?

As for the effect of this counter cyclical factor restart, China foreign exchange trading center did not hide it in the press release. "By the time of publication, most of the quotation banks had adjusted the" counter cyclical coefficient ", which is expected to play a positive role in keeping the RMB exchange rate basically stable at a reasonable and balanced level in the future," said the Secretariat of the self regulatory mechanism of the foreign exchange market

This is very obvious. Or make another picture to illustrate. I hope it can help you. Avoid exchange rate risk in time.

Central bank's "sword index" offshore forward RMB exchange rate discourse right

On August 17, the latest data from safe showed that although the RMB exchange rate fell rapidly in July, the bank settled 1056.1 billion yuan of foreign exchange on behalf of customers, sold 1059 billion yuan of foreign exchange, and the deficit between settlement and sale of foreign exchange was only 2.9 billion yuan. However, in the shadow of the expected devaluation of the RMB, this indicates that the pressure on banks to sell foreign exchange forward is increasing.

A number of foreign exchange traders interviewed said that the central bank had previously raised the foreign exchange risk reserve ratio of the forward selling foreign exchange business of banks, behind which the central bank intends to re enhance the voice of the offshore RMB market in the long term.

On August 20, in an interview with 21st century economic report, Guan Qingyou, President of the Financial Research Institute, pointed out that carrying out swap transactions in the offshore market has always been an important means for central banks to "regulate" the pressure of exchange rate fluctuation. However, to succeed in this move, corresponding supporting measures are needed, including withdrawing currency liquidity to make short selling capital disorderly And deliver clear intervention signals to affect market operation mood, etc.

"It can be predicted that when the RMB falls to 7, the exchange rate defense war of the central bank will start soon, and we can't rule out repeating the phenomenon since May last year - using the foreign exchange intervention combination such as the introduction of counter cyclical factors to crack the RMB short position and completely reverse the expectation of RMB devaluation." Guan Qingyou is frank.

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