"Rapid appreciation of the RMB is not sustainable"

"Factors that may drive RMB devaluation cannot be ignored"

As the exchange rate of yuan/renminbi hit a record high, two pieces of news on Sunday caught the eye of your Pekingnologist, one from Xinhua News Agency, the other from the Financial News, a newspaper under the People’s Bank of China.

Both titles speak for themselves:

Authoritative Interview Sheng Songcheng: The rapid appreciation of the RMB is not sustainable

Financial News commentator’s article: Four major factors that may drive RMB devaluation in the future cannot be ignored

You don’t really need much beyond that, do you?

Plus, there were two press releases on the central banks’ website, published on Thursday and last Sunday (May 23) respectively, and some episodes a bit earlier.

All the emphasis below is mine.

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权威访谈丨盛松成:人民币快速升值不可持续

Authoritative Interview丨 Sheng Songcheng: The rapid appreciation of the RMB is not sustainable

近期,人民币汇率有所走强,引起市场普遍关注。如何看待人民币汇率走势?人民币汇率近期波动会带来怎样影响?针对这些热点问题,中欧国际工商学院教授、中国人民银行调查统计司原司长盛松成30日接受了新华社记者专访。

Recently, the RMB exchange rate has strengthened, causing widespread concern in the market. How to see the trend of the RMB exchange rate? What will be the impact of the recent fluctuation of the RMB exchange rate? In response to these hot issues, Sheng Songcheng, professor of China Europe International Business School and former director of the Department of Investigation and Statistics of the People's Bank of China, was interviewed by Xinhua News Agency on the 30th.

人民币不具备快速升值的基础

(subtitle) The yuan does not have the basis for rapid appreciation

问:近日人民币对美元即期汇率升破6.4。您如何看待近期人民币对美元汇率走强及其原因?

Q: Recently, the spot exchange rate of RMB against USD rose above 6.4. How do you think about the recent strengthening of RMB against USD and its reasons?

答:人民币汇率有升有贬,双向浮动已成常态。自去年下半年以来,人民币对美元即期汇率累计升值8.2%,并于去年末已趋于平稳,人民币对美元汇率在6.5附近波动。

这首先得益于我国率先控制住疫情、率先复工复产,率先实现正增长,其次是由于我国坚持正常的货币政策。

2020年以来,除我国以外的全球主要经济体均采取极度宽松的货币政策。美联储资产负债表从去年年初的4.2万亿美元激增至目前的7.9万亿美元。而我国坚持不搞“大水漫灌”,央行资产负债表基本稳定在38万亿元人民币上下。

与此同时,中国成为全球第一投资目的地。近年来,中美利差走阔,曾一度高达2个百分点以上。数据显示,2020年外资增持境内债券达1861亿美元,流入我国的直接投资(FDI)逆势增至2120亿美元,增长14%。境外资金大幅增持人民币资产,也推高了人民币汇率。

去年下半年人民币汇率表现强劲,应当说已经充分反映了这些利好因素;去年末以来,没有新的利好刺激,人民币汇率表现总体稳定。但是,近日受一些不当言论误导,人民币对美元汇率出现了一些超调现象。

今年以来,美元指数先升后贬,近一个半月内下降2.2%,欧元和日元对美元分别升值2.3%和贬值0.4%,但人民币升值2.9%。尤其最近,美元指数已处于相对低位的90.00上下,美国经济复苏快于欧日,美元指数再下行的可能性较小。根据市场规律,人民币对美元汇率也应相对平稳,但最近人民币对美元汇率屡创新高,表明市场存在超调现象。

A: The RMB exchange rate has risen and fallen, and two-way floating has become the norm. Since the second half of last year, the RMB spot exchange rate has appreciated by 8.2% against the USD and has stabilized at the end of last year, with the RMB fluctuating around 6.5 against the USD.

This is firstly due to the fact that China has taken the lead in controlling the pandemic, resuming work and production, and achieving positive growth, and secondly due to our adherence to a normal monetary policy.

Since 2020, major global economies other than ours have adopted extremely accommodative monetary policies. The Federal Reserve balance sheet surged from $4.2 trillion at the beginning of last year to $7.9 trillion at present. China insists on not engaging in "flooding", and the central bank balance sheet is basically stable at RMB 38 trillion.

At the same time, China has become the world's number one investment destination. In recent years, the spread of interest rates between China and the United States has widened, once as high as 2 percentage points or more. Data show that foreign capital increased its holdings of domestic bonds by $186.1 billion in 2020, and direct investment (FDI) inflows into China bucked the trend to reach $212 billion, up 14%. The significant increase in foreign holdings of RMB assets has also pushed up the RMB exchange rate.

The strong performance of the RMB exchange rate in the second half of last year should be said to have already fully reflected these favorable factors; since the end of last year, without new favorable factors, the RMB exchange rate performance has been generally stable. However, recently, misled by some inappropriate remarks, the RMB has experienced some overshooting against the USD.

This year, the dollar index has risen and then depreciated, falling by 2.2% in the last month and a half, while the euro and the yen appreciated by 2.3% and depreciated by 0.4% respectively against the dollar, but the RMB appreciated by 2.9%. Especially recently, the dollar index has been around a relatively low level of 90.00, the U.S. economy is recovering faster than Europe and Japan, and the possibility of the dollar index going down again is smaller. According to the laws of the market, the exchange rate of RMB against USD should also be relatively stable, but the recent record high of RMB against USD shows that there is overshooting in the market.

问:今后一段时间人民币汇率走势如何?

Q: What is the trend of RMB exchange rate in the coming period?

答:当前人民币过快升值有可能已经出现超调,未来看不可持续,也不符合国内外经济金融形势。

首先,美国经济下半年有望出现全面反弹,美元或随之走强。根据国际货币基金组织(IMF)预测,2021年美国GDP增速将达6.4%。同时,中美利差从去年的大幅走阔转向收窄,热钱涌入势头或有所收敛。去年11月中旬,中美十年期国债收益率之差达2.5个百分点,为历史高点,而目前已收窄至1.5个百分点,且美债收益率仍有进一步上行的压力。

其次,人民币汇率升值无法抵消大宗商品价格的上涨,不能成为工具。大宗商品价格通常全球化定价,人民币一定幅度的升值,对大宗商品价格的影响很小。本轮大宗商品价格上涨是全球(包括我国)供需关系和市场投机行为造成的,不可能通过人民币升值来抑制。

再次,人民币汇率超调是短期投机行为,不可持续。我国坚持对外开放,鼓励长期资金投资,但要防止短期资金大量流入,推高人民币汇率,削弱出口企业竞争力,扰乱我国金融市场和货币政策的独立施行。

A: The current rapid appreciation of RMB may have overshot itself, which is unsustainable in the future and not in line with the domestic and international economic and financial situation.

First, the U.S. economy is expected to rebound comprehensively in the second half of the year, and the dollar may strengthen accordingly. According to the International Monetary Fund (IMF) forecast, the U.S. GDP growth rate will reach 6.4% in 2021. At the same time, the Sino-U.S. interest rate differential has shifted from last year's sharp widening to narrowing, and the momentum of hot money influx (into China) may go to restraint. In mid-November last year, the difference between U.S. and Chinese 10-year treasury yields reached 2.5 percentage points, a record high, while it has narrowed to 1.5 percentage points, and there is still pressure on U.S. bond yields to go up.

Second, RMB exchange rate appreciation cannot offset the rise in commodity prices and cannot be a tool. Commodity prices are usually priced globally, and a certain appreciation of the RMB will have little impact on commodity prices. The current round of commodity price increase is caused by global (including China's) supply and demand and market speculation, which cannot be suppressed by RMB appreciation.

Third, RMB exchange rate overshooting is short-term speculative behavior and is not sustainable. China insists on opening up to the outside world and encourages long-term capital investment, but it is important to prevent a large inflow of short-term capital from pushing up the RMB exchange rate, weakening the competitiveness of the export companies and disrupting the independent implementation of China's financial market and monetary policy.

人民币快速升值会冲击中小企业

(subtitle) Rapid appreciation of the RMB will impact SMEs

问:汇率单边快速升值会对市场主体带来哪些影响?

答:人民币升值将减少出口企业利润,尤其对中小企业的冲击更大。实际上,企业一般希望汇率基本稳定,以避免汇率波动的干扰,无法专注生产和经营。

5月19日召开的国务院常务会议指出,要保持货币政策稳定性和人民币汇率在合理均衡水平上的基本稳定,合理引导市场预期。帮助市场主体尤其是小微企业、个体工商户应对成本上升等生产经营困难。

汇率单边快速升值还容易造成企业放逐其主营业务,转而进行汇率套利,甚至汇率投机炒作,进而损害实体经济。外汇远期是一种有效的套期保值、规避风险的工具,应合理适当使用,而不应作为投机的工具。吸收存款、发放贷款是银行等金融机构的主要功能,金融机构要聚焦主业、回归本业,更好地服务实体经济,而不应押注汇率升贬,甚至投机炒作。

Q: What impact will the unilateral rapid appreciation of the exchange rate have on market players?

A: RMB appreciation will reduce the profits of export enterprises, especially the impact on SMEs is greater. In fact, enterprises generally hope that the exchange rate is basically stable, in order to avoid the interference of exchange rate fluctuations and the inability to focus on production and operation.

The State Council executive meeting held on May 19 pointed out that the stability of monetary policy and the basic stability of the RMB exchange rate at a reasonable equilibrium level should be maintained, and market expectations should be guided reasonably. (We shall) help market players, especially small and micro enterprises, individual business households to cope with rising costs and other production and business difficulties.

汇率单边快速升值还容易造成企业放逐其主营业务,转而进行汇率套利,甚至汇率投机炒作,进而损害实体经济。外汇远期是一种有效的套期保值、规避风险的工具,应合理适当使用,而不应作为投机的工具。吸收存款、发放贷款是银行等金融机构的主要功能,金融机构要聚焦主业、回归本业,更好地服务实体经济,而不应押注汇率升贬,甚至投机炒作。

Rapid unilateral appreciation of the exchange rate also tends to cause enterprises to banish their main business and turn to exchange rate arbitrage, or even exchange rate speculation, which in turn damages the real economy. Foreign exchange forward is an effective hedging and risk-averse tool that should be used reasonably and appropriately, and not as a tool for speculation. The main function of financial institutions such as banks is to take deposits and issue loans. Financial institutions should focus on their main business, return to their original business and better serve the real economy, instead of betting on exchange rate appreciation or depreciation, or even speculating.

问:从国际经验来看,各国应对本币升值有哪些有效工具?

Q: From the international experience, what are the effective tools for countries to deal with the appreciation of local currency?

答:针对资本流入短期激增的情况,有些国家曾采取多种政策措施。冰岛在2016年对部分流入外资收取高达75%的无息准备金,储蓄一年后降至40%。韩国在2011年开始对银行非存款外汇负债收取“宏观审慎税”,时间越长,税率越低,负债不到6个月,税率高达1%。

我国有足够的政策工具可以运用。去年10月以来,人民银行在外汇市场供求基础上,采取必要的政策和改革措施,引导人民币汇率在合理均衡水平上的基本稳定。去年10月12日起,远期售汇业务的外汇风险准备金率从20%下调为0;10月27日起,逆周期因子“淡出使用”。人民银行还可以采取其他宏观审慎调节举措,维护跨境资金双向均衡流动。

A: In response to the short-term surge in capital inflows, some countries have taken a variety of policy measures. Iceland charged an interest-free reserve of up to 75% on some incoming foreign capital in 2016, which was reduced to 40% a year after savings. South Korea began charging a "macroprudential tax" on non-deposit foreign currency liabilities in 2011, with the tax rate decreasing over time - for liabilities, less than 6 months old the tax can be up to 1%.

We have enough policy tools to use. Since October 2020, the People's Bank of China has taken the necessary policy and reform measures based on the supply and demand in the foreign exchange market to guide the basic stability of the RMB exchange rate at a reasonable equilibrium level. Since October 12 2020, the Foreign Exchange Risk Reserves Ratio was lowered from 20% to 0; since October 27, the counter-cyclical factor has been "faded out of use". The PBoC can also take other macro-prudential measures to maintain a balanced flow of cross-border funds in both directions.

长期坚持有管理的浮动汇率制度

(subtitle) Long-term adherence to a managed floating exchange rate system

问:如何看待当前我国汇率制度?

Q: How to view the current exchange rate system in China?

答:人民银行完善以市场供求为基础、参考一篮子货币进行调节、有管理的浮动汇率制度,这一制度在当前和未来相当长时期都是适合中国国情的汇率制度安排。

IMF公布的其成员国的汇率制度具有代表性的有三种:硬盯住汇率制度、软盯住汇率制度和浮动汇率制度。

2009年至2019年,采取硬盯住汇率制度(即固定汇率制度)的国家和地区占比小幅提高,从12.2%升到12.5%,实行浮动汇率制度的国家占比从42%下降至34.2%,而实行软盯住汇率制度(即类似我国的有管理的浮动汇率制度)的国家和地区占比从34.6%大幅提升到46.4%。这说明采取类似我国汇率制度的国家已越来越多,也表明完全“清洁浮动”不一定优于非完全“清洁浮动”。

人民银行近期多次强调,要长期坚持以市场供求为基础、参考一篮子货币进行调节、有管理的浮动汇率制度,合理引导市场预期,发挥汇率调节宏观经济和国际收支自动稳定器作用,保持人民币汇率在合理均衡水平上的基本稳定。

可见,未来人民银行将注重正确的舆论和预期引导,人民币汇率的走势也将继续取决于市场供求和国际金融市场变化。

A: The PBoC has perfected a managed floating exchange rate system based on market supply and demand, adjusted by reference to a basket of currencies, and this system is an exchange rate system suitable for China's national conditions at present and for a considerable period of time in the future.

There are three representative exchange rate regimes announced by the IMF for its member countries: a hard pegged exchange rate regime, a soft pegged exchange rate regime, and a floating exchange rate regime.

From 2009 to 2019, the percentage of countries and regions with hard pegged exchange rate regimes (i.e., fixed exchange rate regimes) increased slightly from 12.2% to 12.5%, the percentage of countries with floating exchange rate regimes decreased from 42% to 34.2%, and the percentage of countries and regions with soft pegged exchange rate regimes (i.e., managed floating exchange rate regimes similar to China's) increased significantly from 34.6% to 46.4%. This shows that more and more countries have adopted exchange rate systems similar to China's, and also shows that a full "clean float" is not necessarily better than a non-full "clean float".

The People's Bank has recently stressed repeatedly that we shall adhere to a managed floating exchange rate system based on market supply and demand, adjusted by reference to a basket of currencies, reasonably guide market expectations, enable the exchange rate to play the role of an automatic stabilizer for adjusting the macroeconomy and the balance of payments, and maintain the basic stability of the RMB exchange rate at a reasonable equilibrium level.

It can be seen that the PBoC will focus on correct guidance of public opinion and expectations in the future, and the trend of RMB exchange rate will continue to depend on market supply and demand and changes in international financial markets.

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《金融时报》评论员文章:未来可能推动人民币贬值的四大因素不能忽视

Financial News commentator’s article: Four major factors that may drive RMB devaluation in the future cannot be ignored

近期人民币汇率有所升值。往前看,既有支持人民币升值的因素,也有支持人民币贬值的因素。未来可能推动人民币贬值的四大因素不能忽视。

The RMB exchange rate has appreciated recently. Looking forward, there are both factors that support RMB appreciation and factors that support RMB depreciation. Four major factors that may push the RMB to depreciate in the future cannot be ignored.

一是美联储退出量化宽松货币政策。今年一季度,市场对美国通胀回升、美联储货币政策收紧的预期较高,10年期美国国债收益率一度触及1.78%的疫情以来高点,美元指数也升至93.4。二季度以来,美国经济数据总体仍较为强劲,通胀数据远超预期。4月美国消费者物价指数(CPI)同比升4.2%,高于3.6%的市场预期,创2008年9月来新高;环比升0.8%,高于预期的0.2%,创近十年来新高。美4月工业品价格指数(PPI)同比涨幅更是达到6.2%。以5年期通胀保护债券(TIPS)收益率衡量的通胀预期超过2.8%,创下2005年以来最高点。若未来通胀持续超预期,联储很可能收紧货币政策,资金从新兴市场大幅回流美国,包括中国在内的新兴市场货币将面临明显贬值压力,需要警惕。

First is the withdrawal of the Federal Reserve from quantitative easing monetary policy. In the first quarter of this year, market expectations for a pickup in U.S. inflation and tightening of Fed monetary policy were high, with the 10-year U.S. Treasury yield once hitting a high of 1.78% since the pandemic and the U.S. dollar index rising to 93.4. Since the second quarter, U.S. economic data has remained relatively strong overall, with inflation data far exceeding expectations. The CPI rose by 4.2% year-on-year in April, higher than market expectations of 3.6% and a new high since September 2008; it rose by 0.8% month-on-month, higher than expectations of 0.2%, which is also a new high in nearly a decade. The U.S. industrial price index (PPI) even rose by 6.2% year-over-year in April. Inflation, as measured by the yield on 5-year Treasury Inflation-Protected Security (TIPS), is expected to exceed 2.8%, the highest point since 2005. If future inflation continues to exceed expectations, the Federal Reserve is likely to tighten monetary policy, and capital will flow back to the U.S. from emerging markets significantly, and emerging market currencies, including China, will face significant depreciation pressure, on which (We) need to be alert.

二是美国经济强劲复苏带动美元走强。美国疫苗接种较为迅速,市场普遍预期美国疫情将在年内得到有效控制,部分州已宣布将于近期完全解除疫情期间的防疫措施,重新开放经济,这支持一季度以来美经济指标不断走强。另一方面,拜登政府上台后,已推动国会通过了1.9万亿美元的刺激法案,近日又宣布了6万亿美元的经济刺激计划,这将对美国本已较为强劲的疫后经济复苏提供新的催化剂,带动美元指数走强,对包括人民币在内的新兴经济体货币带来贬值压力。

Second, the strong recovery of the U.S. economy has led to a stronger dollar. The U.S. vaccination is more rapid, the market generally expects the U.S. pandemic will be effectively controlled during the year, and some states have announced that they will completely lift the measures to control the pandemic in the near future and reopen the economy, which supports the strengthening of the U.S. economic indicators since the first quarter. On the other hand, after taking office, the Biden administration has pushed Congress to pass a $1.9 trillion stimulus bill and recently announced a $6 trillion stimulus package, which will provide a new catalyst for the already strong post-epidemic economic recovery in the U.S., driving the U.S. dollar index to strengthen and putting depreciation pressure on currencies of emerging economies, including the yuan.

三是全球疫情逐渐得到控制和供给能力恢复。2020年新冠肺炎疫情暴发后,全球供给能力受损。中国率先控制住疫情并实现复工复产,经济快速复苏,出口表现强劲,今年以来延续了恢复发展态势。一季度GDP同比增长18.3%,1-4月出口同比增速为44%,贸易顺差1579亿美元,同比增长174%。目前欧美等经济体疫苗接种进度较快,正在计划解除国内禁令并重启开放。前期一度失控的印度疫情也得到控制,新增病例数从高位回落。未来随着疫苗接种率进一步提升,各国可能会先后形成有效免疫屏障,这将推动全球经济快速恢复,供给能力明显增强,形成对中国出口和人民币汇率贬值的压力。

Third, the global pandemic is gradually being brought under control, and supply capacity is being restored. 2020 saw an outbreak of COVID that damaged global supply capacity. China took the lead in controlling the pandemic and resuming production, with rapid economic recovery and strong export performance, continuing the recovery trend this year. GDP grew 18.3% year-on-year in the first quarter, exports grew 44% year-on-year from January to April, and the trade surplus was US$157.9 billion, up 174% year-on-year. Vaccination is now progressing faster in economies such as Europe and the US, and plans are underway to lift the domestic ban and reopen it. The outbreak in India, which was once out of control in the previous period, has also been brought under control, with the number of new cases falling back from a high level. In the future, as the vaccination rate further increases, countries may successively form an effective immunization barrier, which will drive a rapid recovery of the global economy and significantly increase supply capacity, creating pressure on China's exports and RMB exchange rate depreciation.

四是美国资产泡沫可能破裂,全球避险情绪升温。受美国大规模量化宽松政策、疫苗接种、经济复苏等因素影响,美股疫情后表现反而亮眼,道琼斯、纳斯达克、标普三大股指较疫情暴发以来的低点反弹超70%以上,屡创历史新高,市盈率已远远高于历史平均中位数。股市繁荣过分依赖宽松货币政策,明显超过经济表现,缺少坚实的经济基本面支撑。未来美联储退出宽松货币政策,有可能刺破资产泡沫,引发美资产价格大幅调整,刺激全球市场避险情绪升温,资金回流美国救市,推升美元指数,拉低非美货币。

Fourth, the U.S. asset bubble may burst and global risk aversion heats up. Influenced by the large-scale quantitative easing policy, vaccination and economic recovery in the United States, the performance of U.S. stocks after the pandemic has instead been bright, with the three major stock indices rebounding by more than 70% from their lows since the outbreak, hitting record highs repeatedly and with P/E ratios already well above the historical average median. The stock market boom is overly dependent on loose monetary policy, clearly outpacing economic performance and lacking solid economic fundamentals to support it. The future of the Federal Reserve to withdraw from the easy monetary policy may pierce the asset bubble, triggering a sharp adjustment in U.S. asset prices, stimulating the global market risk aversion, with capital going back to the U.S. to save the market, pushing up the dollar index and pulling down non-U.S. currencies.

***

Thursday, May 27

(partial translation)

全国外汇市场自律机制第七次工作会议在京召开

The seventh working meeting of the national foreign exchange market self-regulatory mechanism was held in Beijing

会议认为,当前外汇市场总体平衡。未来,影响汇率的市场因素和政策因素很多,人民币既可能升值,也可能贬值。没有任何人可以准确预测汇率走势。不论是短期还是中长期,汇率测不准是必然,双向波动是常态,不论是政府、机构还是个人,都要避免被预测结论误导。以市场供求为基础、参考一篮子货币进行调节、有管理的浮动汇率制度适合中国国情,应当长期坚持。在这一汇率制度下,汇率不能作为工具,既不能用来贬值刺激出口,也不能用来升值抵消大宗商品价格上涨影响。关键是管理好预期,坚决打击各种恶意操纵市场、恶意制造单边预期的行为。

会议强调,企业和金融机构都应积极适应汇率双向波动的状态。企业要聚焦主业,树立“风险中性”理念,避免偏离风险中性的“炒汇”行为,不要赌人民币汇率升值或贬值,久赌必输。金融机构不仅不能帮助企业“炒汇”,自身也不宜“炒汇”,否则不利于银行稳健经营,还会造成汇率大起大落。外汇自律机制要坚持不懈,持续引导企业和金融机构树立“风险中性”理念。

The meeting concluded that the current foreign exchange market is generally balanced. In the future, there are many market factors and policy factors affecting the exchange rate, and the RMB may both appreciate and depreciate. No one can accurately predict the trend of the exchange rate. Whether in the short or medium to long term, that the exchange rate is not to be accurately forecasted is inevitable, two-way fluctuations are the norm. Whether it is the government, institutions, or individuals, they shall avoid being misled by the conclusions from a forecast. A managed floating exchange rate system based on market supply and demand, adjusted by reference to a basket of currencies, is suitable for China's national conditions and should be adhered to in the long term. Under this exchange rate system, the exchange rate cannot be used as a tool, neither for devaluation to stimulate exports nor for appreciation to offset the impact of rising commodity prices. The key is to manage expectations and resolutely combat all kinds of malicious manipulation of the market and malicious creation of unilateral expectations.

The meeting stressed that enterprises and financial institutions should actively adapt to the state of two-way fluctuations in the exchange rate. Enterprises should focus on the main business, establish the "risk-neutral" concept, avoid "speculation" behavior that deviates from “risk-neutral” - they shall not bet on the appreciation or depreciation of the RMB exchange rate. Gambling for a long time, you will absolutely lose. Financial institutions not only can not help enterprises to "speculate on foreign exchange", they should not "speculate on foreign exchange" themselves. Otherwise, it is not conducive to the sound operation of banks, but also cause the exchange rate to fluctuate greatly. Foreign exchange self-regulatory mechanism must persevere, and to continue to guide enterprises and financial institutions to establish the "risk-neutral" concept.

Sunday, May 23

刘国强副行长就人民币汇率问题答记者问

Vice Governor Liu Guoqiang answers reporters' questions on RMB exchange rate

问:关于近期人民币汇率走势和人民币汇率形成机制,您怎么看?

Q: What do you think about the recent trend of RMB exchange rate and RMB exchange rate formation mechanism?

答:今年以来,人民币汇率有升有贬,双向浮动,在合理均衡水平上保持了基本稳定。目前,我国外汇市场自主平衡,人民币汇率由市场决定,汇率预期平稳。未来人民币汇率的走势将继续取决于市场供求和国际金融市场变化,双向波动成为常态。

人民银行完善以市场供求为基础、参考一篮子货币进行调节、有管理的浮动汇率制度,这一制度在当前和未来一段时期都是适合中国的汇率制度安排。

人民银行将注重预期引导,发挥汇率调节宏观经济和国际收支自动稳定器作用,保持人民币汇率在合理均衡水平上的基本稳定。

A: Since this year, the RMB exchange rate has risen and fallen, floating in both directions, and has maintained basic stability at a reasonable balance level. At present, China's foreign exchange market balances independently, the RMB exchange rate is determined by the market, and the expectation of the exchange rate is stable. The future trend of the RMB exchange rate will continue to depend on market supply and demand and changes in the international financial market, with two-way fluctuations becoming the norm.

The PBoC has improved the managed floating exchange rate system based on market supply and demand and adjusted by reference to a basket of currencies. And this system is the appropriate exchange rate system arrangement for China at present and for a period of time in the future.

The PBoC will focus on expectation guidance, enable the exchange rate to play the role of an automatic stabilizer for adjusting the macroeconomy and the balance of payments, and maintain the basic stability of the RMB exchange rate at a reasonable equilibrium level.

***

South China Morning Post ran a story on Sunday, May 23 mentioning remarks by Zhou Chengjun, the head of the Finance Research Institute at the PBoC at an academic forum.

His full speech is available on Caixin (in Mandarin). What appears to have caught people’s attention at the time is be the words quoted below. But it’s a very long and technical speech where great caution, as it apparently turns out now, needs to be applied before (mis)taking the words - at an academic forum - as big changes that would be imminent. Plus, the qualifiers must not be omitted.

人民币国际化条件下,我们管不了人民币汇率,中国中央银行最终要放弃汇率目标,人民币汇率是由全球所有市场主体对人民币的偏好、预期和交易决定的。

Under the conditions of RMB internationalization, we cannot control the RMB exchange rate, and the Chinese central bank will eventually have to give up its exchange rate target. The RMB exchange rate will be determined by the preferences, expectations, and transactions of all global market players for the RMB.

and

总体看,人民币对美元在中长期内将持续对美元升值。这既是中国经济持续增长、人民币相对购买力不断提高的结果,也是美联储搞量化宽松和不断扩表的后果之一,而且经验数据也表明,多数成功迈过中等收入陷阱的国家人均收入超过10000美元后,其货币将对美元汇率呈持续升值趋势。

Overall, the RMB will continue to appreciate against the dollar in the medium to long term. This is both a result of China's continued economic growth and the increasing relative purchasing power of the RMB, as well as one of the consequences of the Fed's quantitative easing and constant expansion of its balance sheet, and empirical data also shows that most countries that successfully move beyond the middle-income trap will see their currencies continue to appreciate against the dollar once their per capita income exceeds $10,000.

Also, there were suggestions from a central bank official to let the yuan strengthen to help offset the price rise in commodities imports, as Reuters reported on May 21.